Wells Fargo(US:WFC) Xin Hua Cai Jing·2025-10-28 00:42Core Viewpoint - The South Korean won is identified as a "weak link" among emerging Asian currencies due to domestic economic weakness, narrowing interest rate spreads, and rising capital outflow risks [1] Group 1: Structural Characteristics of the Korean Won - The won is highly sensitive to global and U.S. demand, characterized by a high beta coefficient [1] - It has low interest rate levels and a high degree of capital account openness, making it particularly sensitive to changes in U.S. interest rates [1] Group 2: Monetary Policy Challenges - The Bank of Korea faces ongoing challenges in monetary policy, needing to balance between maintaining interest rates and potential rate cuts [1] - The current complex external environment complicates the decision-making process for the central bank [1] Group 3: Trade Relations and External Vulnerabilities - Lack of substantial progress in the U.S.-Korea trade agreement poses additional risks, with the U.S. demanding concessions that Korea may find difficult to accept [1] - South Korea's export reliance on key industries such as technology, automotive, and shipbuilding remains heavily dependent on the U.S. market, amplifying the won's external vulnerabilities [1] Group 4: Market Expectations and Inflation Outlook - Despite market expectations for a shift towards monetary easing by the Bank of Korea, caution is advised due to the complex inflation outlook [1] - The combination of a highly open capital account, weakening domestic economic conditions, and low interest rates suggests increased pressure for capital outflows [1] - Even if inflation eases, the central bank may limit the extent of rate cuts to maintain exchange rate stability [1]