Korea’s Won Is the Winner

Institutional Investors have named the Korean Won the currency of choice for investing with the weakening U.S. dollar coming in second place.


It was recently announced in a
survey of institutional investors that the Korean Won was declared the most
popular currency to invest in over the next 12 months. Over 47% of
institutional investors preferred the Korean currency with 22% favoring the U.S.
greenback putting the dollar second place. The Won is thought to be very stable
and has risen to a new (4) four month high after increasing its reserves by
over $4 billion reaching a total of almost $290 billion in September. This
signifies that the country would easily be able to overcome any financial
crisis in the near term. The International Monetary Fund (IMF) also recently
commented positively on the country’s economic outlook giving it a bright


The Korean economy is juxtaposed to
its debt laden Asian counterpart–Japan. The Won recently rose 0.5 percent to reach 1,124.35 per
dollar, the currency’s highest level ever outperforming the dollar for nearly 7
straight days. Although it recently pulled back as a result of audit procedures
designed to create more clarity, you can expect investors and capital to flow
into the currency and country. The recent measures in improving auditing
procedures will give investors more confidence. This will undoubtedly create
additional lift to the Korean economy which is powered by strong exports.

Traders and hedge funds will take
note of these measures and the upcoming volatility, which means you can expect
them to aggressively trade and invest in the Won. This will enable Korea’s currency to continue in an upward trend in relation to
the U.S. dollar. The looming threat of quantitative easing in the United States by Federal Reserve Bank along with the protectionist
actions from the Ministry of Finance might slow down the velocity of the Won’s
rise, but this will not keep it from hitting new highs.


About the author

Shawn D. Baldwin is Chairman of the AIA Group (AIA), an alternative investment and advisory firm based in Chicago