Question 1

Scenario A: Escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% South Korea's currency weakness could worsen as investors anticipate further declines in the won's value due to rising geopolitical tensions and a potential widening trade deficit. This escalation is likely triggered by escalating US-China trade tensions, which could impact South Korean chip exports. The rapid decline in the won will cause increased volatility in global markets, potentially leading to a sell-off of Asian assets. * Sharp increase in USD/KRW exchange rate. A sustained rise above 1300 by end-June. * South Korean government announces restrictive measures on capital flows. This could include increased reserve requirements or limitations on foreign currency transactions. Scenario B (Status Quo) — 38% The won's performance remains relatively s (54% model probability, not a guarantee)

Question 2

Scenario B: Status Quo?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% South Korea's currency weakness could worsen as investors anticipate further declines in the won's value due to rising geopolitical tensions and a potential widening trade deficit. This escalation is likely triggered by escalating US-China trade tensions, which could impact South Korean chip exports. The rapid decline in the won will cause increased volatility in global markets, potentially leading to a sell-off of Asian assets. * Sharp increase in USD/KRW exchange rate. A sustained rise above 1300 by end-June. * South Korean government announces restrictive measures on capital flows. This could include increased reserve requirements or limitations on foreign currency transactions. Scenario B (Status Quo) — 38% The won's performance remains relatively s (34% model probability, not a guarantee)

Question 3

Scenario C: De-escalation?

Accepted Answer

Scenario Analysis Scenario A (Escalation) — 50% South Korea's currency weakness could worsen as investors anticipate further declines in the won's value due to rising geopolitical tensions and a potential widening trade deficit. This escalation is likely triggered by escalating US-China trade tensions, which could impact South Korean chip exports. The rapid decline in the won will cause increased volatility in global markets, potentially leading to a sell-off of Asian assets. * Sharp increase in USD/KRW exchange rate. A sustained rise above 1300 by end-June. * South Korean government announces restrictive measures on capital flows. This could include increased reserve requirements or limitations on foreign currency transactions. Scenario B (Status Quo) — 38% The won's performance remains relatively s (13% model probability, not a guarantee)

Why South Korea’s won is falling despite a chip export earnings bonanza

Confirmation indicators

Confirmation indicators

Confirmation indicators