Trade surplus no longer shields weak won, BOK says

For decades, Korea’s economic playbook followed a familiar pattern: Strong exports of semiconductors and automobiles produced trade surpluses that, in turn, tended to support the won. But a Bank of Korea (BOK) report released Friday suggests that link has weakened, pointing to a structural shift in how the currency interacts with global markets. Despite a steady account surplus since 2015, the real value of the won has continued to fall. Since 2023, that gap has widened; even as the surplus grew, the currency has depreciated faster than many peers. The central bank attributes the “decoupling” to a major change in capital flows. Where surplus dollars once accumulated in official foreign exchange reserves, they are now increasingly directed by private investors — from institutional and individual investors to pension funds — seeking returns abroad. Much of that capital is flowing to the United States. As of 2024, more than 63 percent of Korea’s overseas securities investments were concentrated in the U.S., far above the 25.3 percent average among other advanced economies. That s

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