Citibank: Unexpected agreement reached between the United States and South Korea temporarily eased the pressure on the South Korean won.

Citigroup stated that the United States and South Korea have reached a partial agreement on South Korea's plan to establish a $350 billion US investment fund, which has eased the pressure on the South Korean won and reduced the short-term financing burden on the domestic bond market. Citigroup economist Jin-Wook Kim pointed out in the report that the 25% tariff on South Korean cars will be reduced to 15%, and most South Korean goods will maintain their current tariff levels; the tariff reduction policy for South Korean cars will take effect from the first day of a certain month. For the South Korean automotive industry that is highly dependent on US demand, the downward risks it faces may significantly dissipate. As the Bank of Korea needs to transfer investment returns from foreign exchange reserves to the United States, the role of the National Pension Service of Korea in the foreign exchange market through hedging and overseas asset purchases may become increasingly important. However, in the coming years, the proportion of South Korean private enterprises converting US dollar export income into South Korean won may decrease, which could lead to depreciation risks for the won. Citigroup expects that the impact of this issue on South Korea's monetary policy will be neutral.