Global investment bank (IB) Goldman Sachs projected on the 4th that the Korean won would show a strengthening trend following Lee Jae-myung's presidential inauguration and the expansionary fiscal policy.
According to Shinyoung Securities, Goldman Sachs noted in a comment regarding the presidential election results that it expects a swift cabinet formation and expansionary fiscal policy.
Goldman Sachs stated, "Unlike the early election in 2017, the ruling party is expected to quickly form the cabinet as it has control over both the executive and legislative branches," and added, "It is likely that a supplementary budget will be organized in the third quarter, and the passage of the 2026 main budget in the fourth quarter is probable." They continued, "Both budgets are expected to reflect an expansionary fiscal stance in response to the economic cycle slowdown and trade headwinds."
Goldman Sachs also expressed that reforms across corporate governance could enhance the valuation of the Korean stock market, and they expect the new government to actively engage in resuming trade negotiations with the United States.
Goldman Sachs maintained the Bank of Korea's final benchmark interest rate at 2.25%. They believe the Monetary Policy Committee may implement one additional cut. This level is higher than the average forecast of 2.0% for the final benchmark interest rate, as compiled by Bloomberg.
Goldman Sachs stated, "Easing policy uncertainty, expansionary fiscal policy, and stock market-friendly measures will act as supporting factors for the won's strength," adding, "This aligns with the global recovery trend following a reduction in U.S. exceptionalism."