Korean Won Surges on Semiconductor Demand and Intervention Risks

The South Korean Won (KRW) has been the best performing Asian currency this week, driven by strong demand for semiconductors and reported FX intervention coordination between Korea, the US, and Japan.

DBS Group Research notes that despite equity volatility in Korean chip stocks, physical memory demand remains high, leading to a boom in terms of trade for the Korean economy. The AI-related semiconductor sector is driving this growth, and KRW is starting to benefit from it.

The Korean authorities have reportedly coordinated with the US and Japan on FX market interventions to support the KRW, although the scale and impact are not as significant as the Japanese Yen (JPY) interventions.