Rick Rieder and WGBI Are Coming... Is the Exchange Rate Fall Not Far Away? | Byun Jung-kyu, Daiwa Securities Korea FICC Division Head

릭 라이더•WGBI가 온다…환율 하락도 멀지 않았다? | 변정규 다이와증권코리아 FICC 본부장 [인뎁스60]
Watch on YouTube ↗  |  January 26, 2026 at 00:12  |  26:01  |  3PRO TV (삼프로TV)
Speakers
Byun Jung-gyu — Senior Managing Director, FICC Division, Daiwa Securities

Summary

Byun Jung-kyu, FICC Division Head at Daiwa Securities Korea, argues the won's weakness is likely turning and expects USD/KRW to fall, supported by WGBI inclusion, improved Korean CDS, and possible Fed rate cuts. He sees the yen staying weak and JGB yields biased higher due to Japan's fiscal expansion, while Korean equities may consolidate after their sharp rally. He also views Rick Rieder's likely Fed nomination as accelerating rate cuts and dollar weakness.

  • Korean 5-year CDS has tightened below Japan's, reducing Korea's credit discount.
  • WGBI inclusion from April is expected to bring accelerated foreign inflows into Korean government bonds and support the won.
  • The speaker expects USD/KRW to trade around 1,400 in H1 and potentially reach the 1,300s in H2.
  • He sees the yen unable to strengthen much, with USD/JPY likely staying in the 150s.
  • Japanese fiscal expansion and debt-service costs should keep JGB yields biased higher.
  • Rick Rieder as a possible Fed chair is seen as accelerating rate cuts by June, weakening the dollar and supporting Treasuries.
  • Korean equities have already rallied sharply and may enter a consolidation phase.
Ideas
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 1:15
Won to strengthen as WGBI inflows arrive.
The speaker argues the won's depreciation trend is turning. Korea's 5-year CDS has fallen below Japan's, the Korea discount in rates and credit is being resolved, and WGBI inclusion from April should bring accelerated foreign bond inflows. If Rick Rieder becomes Fed chair and the Fed cuts rates faster, dollar weakness should add to won strength; he expects USD/KRW to stay around 1,400 in H1 and possibly fall into the 1,300s in H2.
USD/KRW HIGH
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 4:27
Korean stocks may consolidate after sharp rally.
The speaker says the Korean equity discount has mostly been resolved after the KOSPI's sharp rally to 5,000. Many stocks, including Samsung Electronics, have risen sharply, so Korean equities may enter a period of consolidation rather than continue their prior pace.
EWY MED
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 6:23
Korean bonds supported by WGBI inclusion.
The speaker says the Korea discount in rates and credit has been resolved, with CDS narrowing and improved policy credibility. WGBI inclusion starts in April and is compressed into eight months, so monthly foreign purchases of Korean government bonds may be larger than usual. Unlike skeptics, he believes WGBI does have an impact on lowering Korean market rates and supporting the won.
Korean government bonds (KTB) MED
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 6:28
Rieder Fed pick supports Treasury prices.
The speaker sees Rick Rieder as likely to be nominated Fed chair. As BlackRock's bond CIO, Rieder has a strong incentive to favor lower policy rates, and if nominated, the Fed could cut rates quickly as early as June. That should support US Treasury prices and a low-rate regime.
TLT MED
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 11:50
Yen weakness persists; USD/JPY stays elevated.
The speaker says the yen's weakness trend is unlikely to reverse materially. Japan's fiscal expansion under Takaichi, heavy JGB issuance, rising debt-service costs, and the difficulty of tightening BOJ policy argue against sustained yen strength. He thinks USD/JPY can remain in the 150s and that a move below 140 is unlikely, while the won is more likely to strengthen than the yen.
USD/JPY HIGH
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 17:53
JGB yields likely rise further.
He argues Japan's fiscal condition and aggressive fiscal expansion make higher JGB yields likely. The government is issuing more debt, interest costs are a record share of the budget, and BOJ and domestic institutions are gradually shifting to private and foreign investors. Even with intervention, the rise in JGB yields is not likely to be permanently capped.
Japanese government bonds MED
Byun Jung-gyu Senior Managing Director, FICC Division, Daiwa Securities 23:14
Betting on further dollar upside is risky.
He says dollar weakness is deepening and momentum has turned in favor of won strength. With the dollar index at 97 and possible faster Fed rate cuts under Rieder, he argues betting on further dollar upside is risky.
US Dollar Index (DXY) HIGH
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This 3PRO TV (삼프로TV) video, published January 26, 2026, features Byun Jung-gyu discussing USD/KRW, EWY, Korean government bonds (KTB), TLT, USD/JPY, Japanese government bonds, US Dollar Index (DXY). 7 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Byun Jung-gyu  · Tickers: USD/KRW, EWY, Korean government bonds (KTB), TLT, USD/JPY, Japanese government bonds, US Dollar Index (DXY)