The won is expected to further strengthen against the dollar as Korea will continue to achieve current account surpluses on the back of a global economic recovery, analysts said.

The exchange rate fell 0.4 won to 1,051.1 won Tuesday, near this year’s low of 1,051 won.

The general market outlook for the Korean won seemed that it will gain a lot faster against major global currencies such as the U.S. dollar, the euro and the Japanese yen.

Analysts have noted that the won-dollar rate could potentially strengthen further toward 1,000 won as the local currency remained undervalued given Korea’s sound fundamentals backed by its brisk exports.

Cho Yun-nam, head of research at Daishin Securities, forecast that the exchange rate could fall below the 1,000 won threshold in the first half of next year.

Korea’s continued current account surplus would make the won stronger as demand for the greenback decreases, Cho said in a televised interview with a local business channel.

LG Economic Research Institute, which projected Korea’s 2014 annual growth at 3.7 percent, expected the won-dollar to fall to around 1,030 won as the effects of a weak yen supported through Japan’s monetary and fiscal stimulus by the so-called Abenomics would be seen in the global markets next year.

It forecast Korea’s 2014 exports to rise an average of 6.1 percent, down from its initial projection of 9.5 percent as a strong won against the dollar and the yen would weaken Korean products’ price competitiveness overseas, LGERI said in a report.

A stronger won would likely prompt Korean government officials to intervene in the currency market by openly cautioning foreign exchange traders or by selling its won holdings to weaken the local currency.

By Park Hyong-ki (hkp@heraldcorp.com)