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: sur

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.