A Bank of Korea study finds overseas investment income supports the won less
than expected because a large share of returns are retained and reinvested
abroad rather than repatriated, creating a gap between the recorded investment
income surplus and actual FX inflows. As overseas asset positions have grown
rapidly, the effect has intensified and helps explain why the won remains
relatively weak despite strong semiconductor exports and a near‑record current
account surplus. The won has depreciated over 5% year‑to‑date, one of the
weakest performances in Asia. The report says policymakers should monitor
repatriation rates as well as income size; it estimates a roughly 3% increase in
overseas asset stock above the average would push USD/KRW about 0.7 percentage
points higher, reflecting stronger dollar demand, while an 8% rise in investment
income above the mean could lower the rate by about 0.4 percentage points.
