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2025-10-30 07:39:09
[Citi: Unexpected US-South Korea Agreement Temporarily Eases Pressure on the Korean Won] Citi stated that the US and South Korea reached a partial agreement ahead of schedule on South Korea's planned $350 billion US investment fund. This development has eased pressure on the Korean won and reduced the short-term financing burden on the South Korean domestic bond market. Citi economist Jin-Wook Kim noted in a report that the 25% tariff on South Korean-made cars will be reduced to 15%, and most South Korean goods will maintain their current tariff levels. The tariff reduction policy for South Korean-made cars will be retroactive to the first day of a specific month (likely November 1st). For the South Korean auto industry, which is highly dependent on US demand, the downside risks may be significantly reduced. As the Bank of Korea needs to remit investment returns from its foreign exchange reserves to the US, the National Pension Service (NPS) may play an increasingly important role in the foreign exchange market through foreign exchange hedging and overseas asset purchases. However, in the coming years, the proportion of South Korean private companies converting their dollar export revenue into won may decline, potentially triggering a depreciation risk for the won. Citi expects this event to have a neutral impact on South Korean monetary policy.
