The Korean won will sound the horn for a counterattack? With plummeting oil prices and foreign capital inflow, strategists predict a return to 1420 in the second quarter.

Strategists say that the Korean won may rebound to levels before the US-Iran conflict erupted in the second quarter of this year due to falling oil prices and inflow of foreign capital into the Korean stock market. Yu Li Bank predicts that the won will rise to 1420 won per US dollar, implying a 4% increase from current levels. NH Investment Securities and KB Kookmin Bank, on the other hand, believe that the won will strengthen to around 1450 won per US dollar, which is close to the pre-conflict level of 1440 won. After rising for seven consecutive trading days, the won fell 0.5% to 1,484.55 won against the US dollar on Thursday. The sharp drop in oil prices is easing pressure on import-reliant markets in Korea and other Asian countries, which showed signs of rebound on Wednesday. There are also signs this week of global capital returning to the Korean stock market. With the won already testing extreme levels and signs of easing tension in the Middle East, expectations for the won to rebound are rising. Yu Li Bank economist Gyeong-Won Min said, "If uncertainty in the Middle East eases, excessive long positions in the US dollar will gradually unwind. Potential supply and demand conditions related to Korea's fundamentals should remain robust, and if foreign capital turns into net buying of Korean stocks, the won's rebound speed may be faster than expected." However, some institutions still expect the won to weaken further. Foreign investors sold a record-high $23.8 billion worth of Korean Composite Stock Price Index (Kospi) stocks in March, exacerbating depreciation pressure on the won. Maybank forex strategist Shawn Lim said that with the current ceasefire agreement seeming fragile, the won may fall to 1,500 won by the end of this quarter. He said, "Considering the two-way risks, the reopening of the Strait of Hormuz will not happen overnight, and even if it does reopen, it will take time for oil production to return to normal. The breakdown of any ceasefire agreement will support the US dollar." However, overseas investors have been net buyers of Korean stocks for two consecutive trading days, with purchases totaling $1.3 billion on Wednesday. NH Investment Securities economist Ahmin Kwon added that strong first-quarter corporate earnings may support capital inflows. She said that the current exchange rate combined with solid corporate earnings may appear attractive to overseas investors.