The Korean won will remain strong against the US dollar next year, hitting its peak in the third quarter, a local economic think tank said in its report Tuesday.
The Hana Institute of Finance predicted that the won will reach 1,130 won per dollar in the last quarter of this year and rise to 1,115 won in the first quarter next year. It will climb more to 1,095 won in the second quarter before ending the third quarter at 1,080 won, according to the institute. The fourth quarter next year will see the currency fall somewhat to 1,090 won per dollar, it said.
The dollar has been losing ground against the won in recent months. Last week, it hit this year's lowest, falling under 1,100 won against the dollar.
50,000 won banknotes are stacked at a bank in Seoul. (Yonhap)
Bloomberg's survey of investment banks also predicted a retreating dollar but at a higher exchange rate than suggested by Hana. Results from Bloomberg put the fourth quarter rate at 1,140 won per dollar and at 1,125 won in the third quarter next year. The dollar was estimated at 1,120 won for the fourth quarter.
Hana cited the cycle of the dollar, which stays weak for 10 years before growing robust for the next six years. The report described the dollar's weak cycle that continued from February 2002 to August 2011 and the following strong cycle from September 2011 to December 2016. This year would be the return of the weak cycle, it said.
The inauguration of US President Donald Trump this year and expectations of rate hikes by the US Fed pushed up the dollar at the start of the year, but the trend will be temporary, the report said.
"The Fed's monetary policy has already been reflected in the exchange rate," it said, adding that the congressional hurdle will delay the effect of the Trump government's fiscal policies.
"There could be spurts of a strong dollar," the report said, "but we predict the won-dollar exchange rate will adjust downward."
