Analysts at MUFG Bank, hold a neutral perspective on the USD/KRW, due to less support from fundamentals and a weaker US dollar. They see the pair at 1110.0 by the end of the second quarter and at 1080.0 by the end of the third quarter. 

Key Quotes:

“South Korea’s economy continued to expand and already recovered to its prepandemic level in 2021Q1. Its real GDP was up 1.6%qoq in 2021Q1, beating market consensus expectations. Labour market conditions improved in March, helped by service sector’s employment due to the easing of social distancing, the jobless rate declined. However, the fourth wave of the pandemic had started to loom since the end of March.”

“The uncertainty of COVID-19 remains high, and the labour market is likely to experience some setbacks in near term. South Korea’s growth momentum likely peaked in this 2021Q1. March trade balance remained on its declining trend.”

“Although we expect a continued strong semiconductor exports in months ahead, improving import demand for capital goods and higher commodity prices may suggest a further narrowing trade balance in May. Potential outward investment by retail investors could also weigh on the external surplus. Economic fundamentals imply less support for the won near term, yet, with the background of USD weakness, we expect a neutral USD/KRW bias in May.”