Korea's Currency Rollercoaster and the Undervalued Stock Market

South Korea anticipates the won's rise to 1,400-per-dollar soon, but acknowledges domestic policies won't stabilize the forex market alone. President Lee Jae Myung comments boosted the won 0.5%. South Korea addresses the "Korea Discount" in stocks, noting valuation improvements. The KOSPI gains 15% driven by AI optimism.

South Korean President Lee Jae Myung expressed optimism regarding the nation's currency, predicting the won will strengthen to approximately 1,400 per dollar within the next month or two. However, Lee emphasized that the stabilization of foreign exchange markets could not be achieved through domestic policies alone.

Following the president's remarks, the won rebounded by 0.5% to trade at 1,468.8 per dollar, reversing earlier losses. Traders attributed the currency's rally to the unwinding of long dollar positions triggered by Lee's comments. The government has been implementing policies since last year to address the won's depreciation, viewed as not aligning with the underlying economic conditions.

Lee also commented on the stock market, which he described as undervalued due to the "Korea Discount." Despite challenges like national security concerns and corporate governance issues, the KOSPI index has surged 15% this month. This growth is fueled by advancements in artificial intelligence technologies and semiconductors, projecting a potential breakthrough beyond 5,000 points.

(With inputs from agencies.)