Citi says that if the won unexpectedly strengthens rapidly and the USD/KRW exchange rate quickly falls below the 1,250 to 1,300 won per dollar range, South Korean authorities may buy dollars in the foreign exchange spot market.

Citi economist Jin Zhenxu wrote in a research report that, based on the goal of smoothing USD/KRW exchange rate fluctuations, historical dollar-purchase levels, and dollar funding needs, once the exchange rate touches that range, foreign exchange authorities may take action; historically, authorities have stepped into the market to buy foreign currency near those levels.

In 2025, when USD/KRW remained in the 1,420-1,470 range, South Korea's exchange rate smoothing intervention operations were increased.

The institution believes that in the coming years, South Korea's foreign exchange authorities will tend to expand the scale of foreign exchange reserves.