USD to KRW Exchange Rate Forecast: Rising in Second Quarter as Predicted by NH Investment & Securities and Woori Bank

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Submitted2024.04.26 18:37
Edit2024.04.27 01:47
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Mixed outlook for the won-dollar exchange rate in the second quarter
‘Prophecy tweezers’ in just two places

Only NH News and Woori Bank predicted that.

Domestic institutions and foreign investment banks
When betting on decline in the field 1,200 won
NH Securities and Woori Bank won “1,360”
The focus on the strong US economy was correct.
Forecasts for the second half of the year with many different variables

Although the US gross domestic product (GDP) growth rate (1.6%) announced on the 25th (local time) was well below the market forecast (2.4%), the dollar exchange rate won trading at a strong rate on. the 26th The KOSDAQ index and the closing price of the won dollar exchange rate today are displayed on the electronic display board in the trading room of Hana Bank’s main branch in Jung-gu, Seoul. / Reporter Kim Beom-jun The won-dollar exchange rate, which was 1,288 won at the end of last year, closed at 1,300 won and 40 won on January 2, the first opening day of this year. The exchange rate in the 1,300 won range, which started at the beginning of the year, will continue until the end of March, leading to the assessment that ‘1 dollar = 1,300 win range’ has become the new norm. This month, employment, prices, and consumption in the US exceeded expectations, undermining expectations of a US interest rate cut and increasing the crisis in the Middle East, making the increase even more leg On the 16th, he surpassed 1,400 intraday wins for the fourth time in history. According to the financial world on the 26th, the average won-dollar exchange rate rose, which was 1,320, 74 won in the fourth quarter last year, to 1,329 won 40 in the first quarter of this year and 1,368 won 17 this year. month (from 1st to 26th).

○ “Rising in the second quarter”… Just two hits

This year’s exchange rate movement significantly missed the expectations of most domestic and foreign financial companies made at the end of last year. Most financial companies expected the exchange rate to remain in the low range of 1,300 won in the first quarter of this year and then fall to the 1,200 won range in the second quarter. It was a prediction based on the assumption that the US Central Bank (Fed) would cut interest rates as much as six times by the end of the year, starting as early as March this year. Domestic financial companies such as Korea Investment, Meritz Securities, Hana, Shinhan Bank, and NH Futures expected the exchange rate to hit 1,290-1,350 won in the first quarter of this year and then fall to 1,270-1,300 won in the second quarter. Foreign investment banks (IBs) such as Goldman Sachs, Morgan Stanley, and Nomura were similar.

Two financial companies are attracting attention by predicting different forecasts and predicting the exchange rate movement until this month. NH Investment & Securities and Woori Bank. In a report presented last November, NH Investment & Securities expected the exchange rate in the first quarter of this year to average 1,320 won and then rise further to 1,360 a it was won in the second quarter. It is close to the average exchange rate from the 1st to the 26th of this month (1,368 won and 17 won). Woori Bank also expected the upward trend to continue from 1,350 won in the first quarter of this year to 1,360 won in the second quarter.

The reason both companies were able to provide relatively accurate forecasts is that they assessed the fundamentals of the US economy as more important than the potential for interest rate cuts. Kwon A-min, an economist at NH Investment & Securities, said, “We believe that the United States will strongly restore its status as a hegemony through technological progress and investment in growth industries. but considering the difference between interest rates and other developed countries and prices, this is not enough.” “We don’t expect the dollar to weaken,” he said. Min Kyung-won, an economist at Woori Bank, has strongly recommended an interest rate cut in September as expectations for a US interest rate cut were high. This is because the expectation of an early interest rate cut is considered excessive.

○ Uncertainty is high… “Hard to predict”

In fact, the reason the exchange rate was difficult to predict this year was due to unforeseen global variables. The escalating crisis between Israel and Iran was a factor that was difficult to predict at the end of last year. A researcher in charge of exchange rates at a securities company said, “There are too many variables affecting the exchange rate,” and “it’s very difficult to predict.” “

Some speculate that, as only the first month of the second quarter is over, the ‘prediction report card’ could change before the end of June. For example, on the 25th, if the fact that the gross domestic product (GDP) of Korea rose in the first quarter surprisingly, while the GDP of the first quarter of the US was slower than expected , raising doubts about the strong US economy, etc., is shown, the value of the win can rise and the exchange rate can fall.

In the third quarter, one of NH Investment & Securities and Woori Bank is expected to have a wrong forecast. NH Investment & Securities expects the average exchange rate in the third quarter to rise further to 1,370 won, while Woori Bank expects it to fall to 1,330 won.

Reporter Kang Jin-gyu josep@hankyung.com