Kangaroos and Tigers: What’s Fueling the AUDKRW’s Unlikely Autumn Surge?
In a season when most eyes are glued to the US dollar and euro, the Australian dollar quietly outpaced the Korean won, rising 4.6% in the past three months. What’s driving this currency pair’s unexpected leap? The answer is a cocktail of commodities, central bank chess, and a crosswind from China’s shifting economic weather.
Iron, Lithium, and the Great Australian Repricing
Australia doesn’t just export kangaroos and koalas—it ships iron ore, coal, and lithium in bulk. Over the last quarter, iron ore prices stabilized near $120 per tonne, and lithium—though down from 2022’s peaks—remains a linchpin for global battery supply chains. South Korea, home to battery giants like LG Energy Solution and Samsung SDI, is a voracious importer of these raw materials.
This commodity demand forms the backbone of the AUD’s resilience. As Korean manufacturers restocked ahead of the tech cycle upturn, demand for Australian exports saw a modest resurgence. The result? Trade flows shifted in Australia’s favor, nudging the FX pair higher.
Central Banks: A Tale of Two Mandates
While the Reserve Bank of Australia (RBA) held cash rates steady at 4.35%, it maintained a hawkish tilt, citing sticky services inflation and a labor market that’s yet to cool. Markets now price in less than a 20% chance of a rate cut before year-end, according to September’s swap data.
Contrast this with the Bank of Korea, which, though cautious, faces a consumer sector still reeling from household debt and property jitters. Korean inflation, after spiking to 3.1% in July, softened to 2.5% by September. The BoK’s signals of a neutral-to-dovish bias put downward pressure on KRW, especially as global investors sought higher-yielding options in the developed market space.
China’s Chill and the Asia-Pacific Domino Effect
China’s property slump and sluggish post-pandemic recovery cast a long shadow. Yet, the Australian dollar proved remarkably insulated. Why? Beijing’s targeted infrastructure stimulus in Q3 2025 buoyed Australian mining exports, even as South Korea’s export machine—particularly in semiconductors—felt the chill from slower Chinese electronics demand.
This divergence magnified the AUDKRW spread. Australia’s exposure to the “old economy” (metals, resources) provided a cushion, while Korea’s tech-heavy portfolio faced global inventory gluts. The gap widened in August, as AUDKRW broke above the 890 handle for the first time since early 2024.
Geopolitics: Submarine Deals and Supply Chains
Defense and technology alliances ripple through currencies. The AUKUS pact, with its focus on Indo-Pacific security and submarine tech, underpinned long-term investment flows into Australia. Meanwhile, South Korea’s chip sector braced for tighter US export controls to China, adding to KRW’s headwinds.
Supply chain “friend-shoring”—with Australia as a trusted resource hub for Korea’s battery and defense ambitions—quietly reinforced the currency pair’s drift.
Not Just a Trade: Why AUDKRW Matters Now
A 4.6% move in a major cross like AUDKRW isn’t just a number—it’s a canary in the Asia-Pacific coal mine. It signals shifting capital, resource realignment, and the macro themes that will define the region’s next act. For investors and corporates with Asian exposure, ignoring this pair is missing the story behind the headlines.