Why does State Street expect the won's strength to be limited through year-end?

State Street said corporate dollar-selling demand is likely to ease because the won has already strengthened sharply since the end of last year. It also said SK hynix ADR-related flows are largely finished and a tax incentive that encouraged dollar sales ended on Aug. 30.

How much did the won rise against the dollar in the third quarter of 2026?

The won appreciated 15.41 percent against the dollar in the third quarter through Sept. 11. State Street said this was the strongest gain among G20 currencies.

What factors does State Street say will still support the won over the medium to long term?

State Street pointed to a record-high current account surplus and improving terms of trade as medium- to long-term supports for the currency. Seo Ji-wang also said Korea-U.S. investment flows and semiconductor companies converting dollars into won for shareholder returns will be important in the fourth quarter.

Won strength limited through year-end as corporate dollar flows fade: State Street

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Summary

State Street said the won’s strength is likely to stay limited through year-end as domestic corporate dollar-selling flows fade, even though conditions remain broadly supportive. Senior APAC macro strategist Choi Ji-uk said the firm turned underweight on the won two weeks ago. The won rose 15.41 percent against the dollar in the third quarter through Sept. 11, while the won-dollar rate jumped 13.6 won to 1,382.2 on Thursday. State Street said medium- to long-term support still comes from a record current account surplus and improving terms of trade.

Key Facts

State Street said the won appreciated 15.41 percent against the dollar in the third quarter through Sept. 11, the strongest gain among G20 currencies.
The won-dollar rate rose 13.6 won to 1,382.2 on Thursday as the Federal Reserve resumed monetary tightening.
State Street said flows related to SK hynix's American depositary receipts have largely run their course, and a corporate tax cut that encouraged dollar sales ended on Aug. 30.
Seo Ji-wang said the key question for the second half of the year is how Korea-U.S. investment flows and semiconductor companies converting dollars into won for shareholder returns will play out in the fourth quarter.
State Street had $54.5 trillion in assets under custody and $5.6 trillion in assets under management as of March 31.

By Lee Yeon-woo

Published Sep 17, 2026 4:24 pm KST
Updated Sep 17, 2026 5:11 pm KST

Choi Ji-uk, senior APAC macro strategist at State Street, speaks at a media rountable at the company's office in Seoul, Thursday. Korea Times photo by Lee Yeon-woo

The won's strength is expected to be limited through year-end as domestic corporate dollar-selling flows fade, despite economic conditions remaining broadly supportive of the currency, U.S. financial firm State Street said Thursday.

"Near-term conditions are clearly supportive," Choi Ji-uk, senior APAC macro strategist at State Street, said at a media roundtable. "But given how significantly the won has strengthened compared with the end of last year, we expect corporate dollar-selling demand to ease somewhat from here."

State Street shifted to an underweight position on the won two weeks ago.

The Korean currency appreciated 15.41 percent against the dollar in the third quarter through Sept. 11, the strongest among G20 currencies. The won-dollar rate jumped 13.6 won to 1,382.2 on Thursday as the Federal Reserve resumed monetary tightening.

Choi explained that flows related to SK hynix's American depositary receipts have largely run their course. A corporate tax cut designed to encourage companies to sell their dollar holdings to make tax payments, thereby adding downward pressure on the exchange rate, also ended on Aug. 30.

"In July and August, the exchange rate typically fell steadily from around 9 a.m. until about 10:30 a.m. before rebounding. That pattern has broken down since September," Choi said. "This may be related to weaker corporate flows."

Adding to the pressure is a correction in the KOSPI. Although the flows are not on the same scale as those seen in the fourth quarter of last year, Choi said investors have begun selling into KOSPI rebounds and shifting funds toward overseas markets. Foreign investors' equity selling has not been particularly large in scale, but it has been persistent.

Still, a record-high current account surplus and improving terms of trade are expected to support the won over the medium to long term.

Seo Ji-wang, head of Korea FX Sales & Trading at State Street, said the second half of the year is when the real test begins.

"There are flows related to Korea-U.S. investment, as well as semiconductor companies converting dollars into won to fund shareholder returns," Seo said. "The key will be how these flows play out in the fourth quarter."

State Street provides financial services to institutional investors, including investment servicing, investment management, investment research and trading. It had $54.5 trillion in assets under custody and $5.6 trillion in assets under management as of March 31.

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