“The won has added volatility to the Korean market for U.S. and other foreign investors. The currency lost 54% of its value during the Asian financial crisis of 1998, and it lost 41% during the 2008 global crisis. So, unless you’re particularly bearish on the dollar (or bullish on the won), there is a case to be made for hedging,” adds Sizemore.

DXKW is worth monitoring because despite the strong won/weak yen scenario, South Korean shares have been solid performers in recent months.  In the past three months, EWY has jumped 12.5% as investors have been lured to South Korea due to low volatility compared to other emerging markets and cheap valuations.

iShares MSCI Capped South Korea ETF

Tom Lydon’s clients own shares of DXJ.