The Korean won has transformed from Asia's worst-performing currency into its best, propelled by capital flows tied to the artificial intelligence frenzy, and strategists believe there is still room for further appreciation. BNP Paribas suggests the currency is poised to extend its rally as Korean chipmakers bring back funds from overseas to expand production, though the pace of gains may be gradual. Goldman Sachs Group indicates that equity inflows attracted by the rising Korean stock market will also lend support to the won.

Natixis holds the view that Korea's export growth will boost the currency. "Over the past five years or so, despite robust exports, funds for capital expenditure used to flow out, but now as semiconductors are all produced locally, money is coming back," said EJ Ethan Seo, head of global markets at BNP Paribas in Seoul. "That's why I think the won will strengthen further." He noted that the currency could gain in the second half of the year, possibly trading slightly above 1,350 per dollar, as exporters' dollar selling exceeds portfolio outflows. On Tuesday morning, the won was quoted at 1,370 per dollar.

Data shows the won has appreciated 5.3% so far this year, outperforming all Asian currencies. This marks a sharp reversal from the first half of 2026, when it fell 7.1% and was the region's worst performer. The won is among the latest beneficiaries of the global AI boom. SK Hynix and Samsung Electronics, the two chip heavyweights, have seen profits surge, leaving them with a growing pile of dollars that they are converting into the local currency, thereby lifting the won.

Goldman Sachs projects the won will climb to 1,350 per dollar over the next 12 months, with the exact degree of appreciation depending on the performance of the Kospi index. "Our equity strategists expect a broader rally in the Kospi, which would be favorable for equity inflows—or at least slow the outflows," analysts including Danny Suwanapruti wrote in a report released on Sunday. "We remain constructive on the won."

Natixis also anticipates a stronger won, albeit at a slower clip, underpinned by solid fundamentals, a softer dollar, and possible further rate hikes by the Bank of Korea. "I think the won will keep strengthening because exports are very strong," said Hong Dayeon, Asia-Pacific strategist at Natixis in Hong Kong. The central bank "has hiked rates already, and we believe there is room for more this year. Based on this, we see a stronger trajectory for the won ahead."