DBS Warns South Korean Won Under Pressure as Semiconductors Pull Back
DBS Group Research said the South Korean won (KRW) is facing renewed headwinds as the global semiconductor sector cools. A pullback in memory-chip demand is weighing on Korea’s export-driven economy.
DBS noted that semiconductors make up about 20% of South Korea’s exports. Softer demand from consumer electronics and data-centre markets reduces foreign currency inflows, which weakens the South Korean won. The KRW has already weakened past 1,330 per US dollar, a level last seen in early November, accelerating after chipmakers issued softer forward guidance.
Beyond semiconductors, DBS highlighted two additional pressure points: a narrowing trade balance and reduced capital inflows. While South Korea still runs a surplus, the margin has thinned as energy import costs stay elevated and export growth decelerates. Separately, foreign investors have trimmed exposure to Korean equities in recent weeks, adding to depreciation pressure on the South Korean won.
DBS concluded that unless chip demand rebounds quickly, the won may remain under pressure in the near term. The currency move has mixed effects for markets: a weaker South Korean won can help exporters’ competitiveness (e.g., autos and shipbuilding) but raises input costs for importers reliant on energy, raw materials, and food.
Traders will likely watch upcoming trade data and central-bank signals for further direction on KRW momentum.
Bearish
DBS’s note is macro-USD/FX negative for KRW: weaker memory-chip demand implies lower export receipts and reduced foreign currency inflows, while a narrowing trade balance and reduced foreign equity exposure add further depreciation pressure on the South Korean won. For crypto markets, such currency stress often acts as a risk-off trigger in the near term—especially when it coincides with USD strength—because it can tighten global liquidity perceptions and increase hedging demand.
Historically, when export-led Asian currencies weaken due to tech/semiconductor downturns (e.g., previous industry slowdowns tied to chip cycles), traders frequently rotate toward USD/safer assets, which can pressure crypto beta (altcoins and high-volatility positions) even if crypto-specific fundamentals are unchanged. That said, if the semiconductor slide is later proven temporary or policymakers respond (FX interventions, revised guidance, or stronger data), the impact can fade and lead to mean-reversion in risk assets.
So the likely path is bearish in the short term (risk sentiment and cross-asset flows), with a more neutral-to-stabilizing longer-term outlook if chip demand and trade metrics stabilize. Key watchpoints are upcoming trade data and any central-bank communication that changes expectations for currency volatility.