Citi noted that the partial early agreement between the U.S. and South Korea on the latter's planned $350 billion U.S. investment fund has alleviated pressure on the Korean won and reduced short-term financing burdens in South Korea's domestic bond market.

Citi economist Jin-Wook Kim highlighted in the report: - Tariffs on South Korean-made vehicles will drop from 25% to 15%, while most other Korean goods will maintain current tariff levels. - The tariff reduction for South Korean automobiles will be retroactively effective from the first day of a specified month (likely November 1).

For South Korea's auto industry, which heavily relies on U.S. demand, downside risks may significantly diminish.

As the Bank of Korea needs to remit investment returns from foreign exchange reserves to the U.S., the National Pension Service (NPS) may play an increasingly critical role in the forex market through hedging and overseas asset purchases.

However, over the coming years, South Korean private firms may reduce the proportion of dollar export earnings converted into won, potentially triggering depreciation risks for the currency.

Citi expects this development to have a neutral impact on South Korea's monetary policy.