The Export-Import Bank of Korea said on the 31st that it will be difficult for the won-dollar exchange rate to fall into the 1,300-won range next year.

The bank's Overseas Economic Research Institute, in its report "Economic and industrial outlook for 2026," set the year-end exchange rate forecast for next year at 1,400 won, saying, "With a weaker U.S. dollar and the maintenance of a current account surplus, the won's weakening trend will ease compared with this year."

An electronic display in front of a currency exchange in Myeong-dong, Jung-gu, Seoul shows exchange rates on the 31st. /Courtesy of News1

The institute said, "Export contraction due to U.S. tariff policy, higher unit prices and shipping costs from additional imports of U.S. energy, and the obligation to fulfill local investment will weigh on the external balance, limiting the scope for the won to appreciate."

The dollar index, which shows the value of the dollar against the currencies of six major countries, is expected to remain low at 96 at the end of next year.

The institute saw that high exchange rates will make base rate cuts limited. The institute said, "The Bank of Korea is under pressure to cut rates due to continued economic slowdown, but the burden from a strong dollar-won rate and an overheated real estate market means the decline in rates is not expected to be large."

Korea's real gross domestic product (GDP) growth rate next year was forecast to be in the "upper 1% range." The private consumption growth rate will rise from 1.3% this year to the upper 1% range next year, but facility investment is expected to fall from 2.6% to around 2%.

As for exports, negative effects from U.S. tariff imposition are inevitable, but exports are expected to record a growth rate of around 2.5% thanks to strong semiconductor exports and higher unit prices, as well as an expansion of electric vehicle exports to Europe.

By sector, export growth rates are expected to be relatively high in defense industry (12.5%), semiconductors (11.3%), bio (10.6%), and automobiles and auto parts (6.3%). Overseas construction (-30.0%), batteries (-10.0%), petroleum products (-21.4%), and petrochemicals (-14.4%) are expected to be weak.

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