BofA: KRW and TWD Present Buying Opportunities After AI Selloff
nashnova research
BofA FX strategist Claudio Piron says the won and Taiwan dollar weakened alongside the AI-driven equity selloff, but large current-account surpluses provide a floor — making current levels a window to go long.
Why does Piron call this a buying opportunity?
The Korean won and Taiwan dollar sold off in lockstep with tech stocks, but Piron sees the dip as an entry point.
The anchor: both Korea and Taiwan run large current-account surpluses — the broadest measure of a country's net earnings from trade and investment. This means → both economies are steadily accumulating foreign exchange, giving their currencies fundamental support.
Piron's words: "This factor will come into play. I think current levels offer an opportunity to build long positions in both the won and the Taiwan dollar."
Is the Taiwan dollar drop a sign of deeper trouble?
Piron notes the Taiwan dollar has the highest correlation with AI-linked ETFs of any Asian currency. In plain terms = when AI stocks rally, the Taiwan dollar rises; when they sell off, it falls — the link is tight.
The recent slide reflects position squeezing — crowded trades being unwound — rather than deteriorating economic fundamentals.
This means → once positioning clears and AI sentiment stabilises, the Taiwan dollar could snap back the hardest.
Why is the US dollar weakening at the same time?
Piron argues the "American exceptionalism" narrative — the idea that the US economy and tech sector lead the world — had been the key prop under the strong dollar. This reflects how tightly dollar strength was tied to the AI trade.
As AI stocks pulled back, that narrative temporarily faded, and the dollar came under pressure.
His explicit targets: USD/KRW at 1,330 by year-end, 1,300 next quarter. Put simply = he is betting the won will keep appreciating over the coming quarters.
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