South Korea recorded a current account surplus of 13.26B in January.
This compares with a surplus of 18.7B in the previous period.
The January current account surplus came in much lower at 13.26 billion compared to the strong 18.7 billion figure we saw in December 2025. This significant drop suggests that the flow of foreign currency into South Korea is slowing down. This is a bearish signal for the Korean Won (KRW).
This weaker surplus aligns with recent data showing a slowdown in key export sectors. For instance, preliminary trade figures for February 2026 indicated semiconductor exports fell 4.5% year-over-year, their first decline in over a year. This confirms the cooling trend and suggests the January number was not an anomaly.
Given this, we should consider strategies that benefit from a weaker Won in the coming weeks. Buying USD/KRW call options or selling KRW futures could be effective ways to position for further currency depreciation. The market is already reflecting this, with the USD/KRW exchange rate moving from around 1,310 to 1,345 over the past month.
Slowing exports will also likely weigh on the KOSPI 200 index, which is heavy with major exporters. We could look at buying put options on KOSPI 200 futures or on ETFs tracking the index. This would provide a hedge against a potential equity market downturn driven by weakening global demand.
We remember a similar export slump back in mid-2025, which preceded a nearly 10% correction in the KOSPI over the following two months. During that period, implied volatility rose sharply, making option-based hedges more expensive later on. It is better to position for that increase in volatility now.
The Bank of Korea is also in a difficult position, adding to the uncertainty. With inflation still persistent at 2.9% as of February, they have limited ability to cut interest rates to support the economy. This policy deadlock could put further pressure on both the currency and equities.
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