Korean Won Down 5% This Year; Bank of Korea Study Links Weakness to Foreign Investment Repatriation Gap

According to a Bank of Korea study released on June 18, the central bank found that foreign investment income retained overseas for reinvestment rather than repatriated to Korea has widened the gap between paper investment surpluses and actual forex inflows, explaining why the won has underperformed despite strong semiconductor exports and near-record trade surpluses.

The won has depreciated more than 5% this year, making it one of Asia's worst performers. The central bank's analysis shows that a 3% increase in overseas investment scale pushes the dollar-won rate up by approximately 0.7 percentage points, while an 8% rise in investment income could lower the rate by about 0.4 percentage points.