A veteran trader from Wall Street titan Citigroup suggests that the recent weakness in the South Korean won may be short-lived, as the nation's memory chip sector continues to substantially boost economic growth and underpin a recovery in the currency against the US dollar before year-end. Unlike the Japanese yen's recent appreciation, which leans more on monetary policy normalization alongside official intervention and stability measures, the Korean won enjoys robust industrial support from semiconductor exports and improving balance of payments. Expanding chip export revenues are increasing potential foreign exchange supply and lifting demand for the local currency when companies invest, pay taxes, and cover operational expenses in South Korea, providing a fundamental foundation for the won's medium-term recovery. The Citi Korea trading head's proposal centers on leveraging short-term macro shocks to position for the won's medium-term rebound, rather than assuming its volatility has concluded.

Based on his latest interview assessments, a hawkish Federal Reserve and elevated oil prices may push the won weaker in the near term, so he views 1,400 won per dollar as an opportunity to sell dollars and buy the won, while maintaining a year-end 2026 target of 1,330 won per dollar. If the AI semiconductor cycle tied to memory chips persists over the long run, exporters resume large-scale dollar selling, and Middle East geopolitical tensions ease, the currency could potentially reach the upper end of the 1,200-plus won per dollar range by the first half of 2027. The critical transmission link here is settlement: robust exports first generate dollar income, and the timing of when companies convert those dollars into won determines when that income translates into more direct local currency buying pressure. The seasoned Citi trader observed that exporters sold dollars relatively quickly in July and August, and with ample won liquidity currently in hand, they are in no rush to continue settlement—some speculative players have even taken the opportunity to short the won. This largely explains why robust global demand for South Korean semiconductor product lines and strong export fundamentals can coexist with the won's short-term pullback, and it forms the core rationale for his contrarian positioning near the 1,400 level.

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Won Buying Opportunity Near 1,400 per Dollar: Citi Korea Trading Head

"Driven by external factors like the Federal Reserve's hawkish stance and inflation concerns from rising oil prices, the won faces risks of further depreciation in the short term, potentially breaking past the 1,400 won per dollar level," Lee Sanghun, Citi's Korea trading head, said in an interview late Wednesday. "I don't believe the won will stay at such a weak level for long. So, near 1,400 won per dollar, it will be a good opportunity to sell dollars and buy won." After two months of gains that made it Asia's strongest-performing currency, the won fell for a fourth consecutive session on Thursday, touching 1,388.25 won per dollar at one point. The Fed's hawkish stance is weighing on the won because US rate hikes widen the US-Korea rate differential, potentially diminishing the appeal of Korean assets. Early Friday, the won opened steady around 1,381.00 per dollar. As the chart shows, following a two-month rally, the won has now declined for four straight sessions. Lee stated that Fed actions have prompted traders to price in additional rate hikes, partially reversing the narrative of a weaker dollar. However, given strong domestic fundamentals, he maintains his year-end target of 1,330 won per dollar. While Lee anticipates further won strength, he noted the pace of appreciation is unlikely to match the past two months. Earlier this month, the won reached its highest level in about two years. Lee said external risks could make the path ahead "bumpy," and South Korea's large current account surplus doesn't necessarily mean companies will convert all their dollar earnings into won. He also believes that if the semiconductor cycle remains strong, chip exporters resume large-scale dollar selling, and Middle East tensions ease, the won could reach the upper end of the 1,200-plus range by the first half of 2027. Drawing on observations from client meetings and business trips, Lee added that exporters "were too hasty selling dollars in July and August," and may now hold ample won liquidity, so they are "not in a rush" to sell more dollars.

Korea's Memory Chip Twin Pillars Solidify Profit Base: Won Recovery Relies on More Than Just a Weaker Dollar

The support for the won and yen during their earlier rallies differs: the yen leans more on monetary policy normalization and intervention or stabilization measures, while the won benefits from the industrial support of semiconductor exports and balance of payments improvements. Expectations of further Bank of Japan rate hikes, combined with joint US-Japan dollar-selling intervention in late July, pushed the yen to a seven-month high of around 152.89 per dollar this month; after the Fed's rate hike, the yen retreated to near 155.50 on September 17, reflecting a tug-of-war between domestic support and short-term dollar strength. South Korea's advantage is more directly evident in export revenues driven by AI demand: August exports surged 68.7% year-on-year to $98.26 billion, with semiconductor exports reaching $46.65 billion and a monthly trade surplus of $34.75 billion. From a balance of payments perspective, persistently expanding chip export revenues increase potential foreign exchange supply and boost local currency demand for corporate investment, tax payments, and operational expenses, laying a fundamental foundation for the won's medium-term recovery.

The appeal of Korea's memory chip twin pillars to global capital is already reflected in both share price revaluations and operating profit expansion. Using uniformly Korea-listed ordinary shares priced in won as of the September 17, 2026 close, SK Hynix is up 168.05% year-to-date, while Samsung Electronics has gained 110.59%—both more than doubling. This performance is supported not just by AI theme momentum: SK Hynix reported second-quarter operating profit of approximately 60.54 trillion won, up 557% year-on-year, with high-bandwidth memory (HBM), AI server DRAM, and enterprise solid-state drives (eSSD) as key high-value product focuses; Samsung Electronics saw overall operating profit of 89.5 trillion won in the same period, with memory division quarterly revenue and operating profit hitting new records and expanding HBM4 sales. From an investment logic standpoint, the memory chip twin pillars attract global capital through the complete chain of "AI infrastructure expanding memory demand—product mix and price improvement—substantial profit realization"; for Korean equity assets, they serve as both a source of earnings growth and a major pillar of exports and foreign exchange income. A moderately appreciating won is a direct positive for unhedged overseas investors in Korean stocks—meaning the same won-denominated assets can be converted into more dollars. Using the Citi trading head's targets for scenario analysis, a move in USD/KRW from 1,400 to 1,330 implies a won appreciation of approximately 5.26% in dollar terms; assuming Korean stocks held during the same period rise 10% in won terms, the dollar-denominated return would be 1.10 × 1400 ÷ 1330 − 1 = 15.79%, excluding dividends, taxes, and transaction costs. The positive implications of won appreciation for the Korean stock market are more precisely reflected in overseas investment returns and capital allocation appeal; the memory chip twin pillars' earnings growth provides a share price foundation, while the won's orderly recovery could add an extra layer of currency returns for international investors. From a capital allocation mechanism standpoint, if earnings growth linked to memory chips and the broader semiconductor supply chain attracts foreign capital to increase Korean equity allocations, corresponding currency conversion demand could strongly support the won, while the won's orderly recovery improves dollar returns for unhedged investors—forming a potential positive stock-currency interaction. However, share price gains alone cannot confirm net foreign capital inflows. The Bank of Korea has also clearly noted that stock market gains, current account surpluses, and the exchange rate do not necessarily move in sync; cross-border capital flows and corporate local currency demand jointly determine actual transmission.

Memory chips are crucial to South Korea's exports and broader economy. South Korea is home to the world's two largest memory chip producers—SK Hynix and Samsung—with SK Hynix, the global HBM leader, serving as Nvidia's core HBM memory system supplier in recent years. The other memory giant, Samsung, is the world's largest DRAM and NAND memory chip supplier and has recently become a HBM supplier to Nvidia, particularly for the GB200/GB300 series AI computing cluster products. AI server memory components remain the clearest supply bottleneck in the AI computing supply chain. TrendForce projects server DRAM contract prices will cumulatively rise about 270% in 2026, with enterprise SSD prices up about 235%; HBM contract prices may still rise 70%–140% in 2027—figures reflecting the combined effects of AI computing expansion and memory price increases. TrendForce's latest estimates indicate DRAM and NAND together will account for 47% of major cloud service providers' capital expenditures in 2026, rising to 68% by 2027, driven by both volume growth and price increases.