Korean Won reigns supreme in Asian emerging market plays

South Korean Won

Being the most sensitive emerging Asian currency, South Korea’s won provides best proxy for investors looking to bet on how the region reacts to U.S. President Donald Trump.

For the past year, the won’s volatility raised to 11 percent, the highest among all of its peers in the region, including the Malaysian ringgit and Indonesian rupiah. The won is also the strongest, rising 5.3 percent against the dollar year-to-date.

So far, the won has remained resilient to both a political that led to the impeachment of South Korea’s President Park Geun-hye and concerns that Trump’s protectionist policies will hurt exports that the nation’s economy is highly dependent upon. Inflows of $5.7 billion into the nation’s bonds and equities have supported the currency.

South Korea’s won has an average daily trading volume increase of 31 percent to $84 billion in 2016 from 2013, the most among global emerging currencies after the Chinese yuan, the Mexican peso and the Hong Kong dollar.

For Eddie Cheung, foreign-exchange strategist at Standard Chartered Plc, which ranked top forecaster for emerging Asia currencies, the won reflects the health of Asian trade. Exports from the region have shown signs of recovery amid expectations growth will pick up in the U.S. and boost demand for goods from companies such as South Korea’s Samsung Electronics Co. and Hyundai Motor Co.

He also said that, “here are a lot of multinationals or corporates there that are externally oriented. The Korea trade numbers are a good indicator of where Asian trade is going in general.”

South Korea’s exports rose a better-than-expected 11.2 percent on-year in January, the most in nearly five years.

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