The South Korean won is under sustained depreciation pressure, and two major global banks warn that a policy shift from the Bank of Korea (BOK) may be imminent. Brown Brothers Harriman (BBH) and Bank of America (BofA) have both issued notes highlighting the currency’s vulnerability, a development that could send ripple effects through the crypto market, traditionally a beneficiary of fiat instability in South Korea.
In a recent analysis, BBH cautioned that the BOK may turn increasingly hawkish as the won weakens against the US dollar. The USD/KRW pair has pushed past psychologically important levels, stoking discomfort among policymakers. BBH noted that the central bank has historically used rate hikes, direct market intervention, and verbal warnings to defend the currency. However, with domestic headwinds including slowing exports and high household debt, aggressive tightening would be a delicate balancing act. Any hawkish move would likely support the won in the short term but could cool equity markets and raise borrowing costs, potentially driving risk-averse investors toward alternative assets like cryptocurrencies.
Bank of America, meanwhile, flagged persistent downside risks for the won despite South Korea’s strong trade surplus. The bank attributes the weakness mainly to the wide interest-rate differential between the US Federal Reserve and the BOK, geopolitical tensions on the Korean peninsula, and a global risk-off mood that favors safe-haven dollars over emerging-market currencies. “The carry advantage is firmly in favor of the dollar,” BofA strategists emphasized, adding that foreign outflows from Korean bond markets are likely to continue. This outlook reinforces expectations that the won could remain under pressure or weaken further, making dollar-priced assets—including cryptocurrencies—more attractive to Korean investors seeking a store of value or speculative upside.
South Korea is one of the world’s most active cryptocurrency markets. Local exchanges like Upbit and Bithumb consistently rank among the top by trading volume, with Bitcoin and Ethereum dominating KRW pairs. Historically, episodes of won depreciation have coincided with spikes in crypto trading volumes as retail and institutional players hedge against currency devaluation. If the BOK hesitates or the rate gap persists, a weaker won could channel more capital into digital assets, providing a tailwind for major coins.
