The recent weakness in the Korean won has sparked renewed interest in understanding what's really driving currency movements. At its core, there's a fascinating shift happening in how domestic investors are deploying their capital—and it all circles back to the AI boom.

Here's the picture: Korean households and institutions are increasingly hungry for AI-linked foreign equities. Whether it's mega-cap tech stocks trading on US exchanges or AI-focused international companies, the appeal is undeniable. The catch? To buy these overseas assets, investors need to exchange won for foreign currency. And that's where the pressure mounts.

When capital flows outbound at scale—chasing those shiny AI opportunities abroad—the domestic currency naturally weakens against major pairs. It's a classic supply-and-demand dynamic. The won faces selling pressure simply because there's more going out than coming in.

This isn't just speculation either. The data tells the story: sustained outflows targeting foreign markets, particularly in the tech and AI sectors, have been a persistent headwind for the won. Meanwhile, foreign investors haven't been equally enthusiastic about buying Korean assets to offset those outflows.

The takeaway? When market sentiment shifts dramatically toward specific narratives—even transformative ones like AI—currency movements often follow. It's a reminder that macro forces and asset allocation trends ripple across multiple markets, and attentive investors should be watching these cross-asset dynamics carefully.