The IMF said the divergence between the South Korean won (KRW) and the Japanese
yen (JPY) is likely driven more by the AI boom than by changes in bilateral
yield differentials. It noted the bond yield gap between Japan and Korea has not
widened materially and markets have already priced some policy-rate increases
for both countries. Nonetheless, KRW appreciated about 11% against JPY from July
1 to Sep 3. The IMF said AI-driven effects on current and capital accounts
better explain the split: surging AI demand boosted Korean semiconductor exports
and exporters’ conversion of proceeds into won, while Japanese firms more often
reinvest overseas rather than repatriate income.
