South Korea’s sizzling currency, the won, should be well supported in foreign exchange markets this year as the country’s large current account surplus and inflows to its bond markets give it strength, argued JP Morgan Private Bank in a series of forex forecasts.

The Asian country’s current-account surplus rose to a record high in November last year, taking its total for the first 11 months of 2012 to well over central bank forecasts and boosting the currency. The surplus was $6.88 billion in November, a record.

And the currency has benefited. The won reached a 17-month high against the dollar last Friday because low interest rates in countries such as the US made the Asian currency attractive, reports said. The won fetched around KRW1.056 against the dollar on Monday. Last week, it hit the KRW1.060 mark; there have been rumours of central bank intervention to cap it.

“The KRW [won] has a lot in its favour. It is one of the more sensitive Asian currencies to global sentiment and has a cheap valuation. We expect the large current account surplus and bond market inflows to continue to support the currency,” Sara Yates, global currency strategist at JP Morgan Private Bank, said in a note for the first quarter of this year.

She gave views on Asian and other regional currencies while also predicting that the strongest gaining asset this year will be copper, which is why the bank is bullish on the Chilean peso, given that Chile is a major exporter of the metal.

“Copper is our most bullish call in 2013 and provides another feather in the cap for the CLP. In addition to offering investors the highest real rate in our currency universe, a strong sensitivity to an improvement in global sentiment and a decent valuation, CLP also has the strongest connection to changes in the copper prices of the commodity currencies,” she said.

As for China, Yates predicts there will be some widening of the permitted fluctuation range of the Chinese renminbi, or yuan, against the dollar in the second half of this year, but that not much variation will occur in the next few moths.

“A widening of the band later in the year alongside greater liberalisation of the exchange rate regime, would be consistent with the Chinese authorities’ long-term aim of a fully convertible capital account. We look for a 1-2 per cent appreciation of the CNY [renminbi] in 2013. As we expect this to be in the context of a wider band, we also look for more cyclicality in USDCNY,” Yates said.

More generally, Yates said that this year will see more loose monetary policy but with fewer downside risks for the global economy, arguing that growth in the US and China will improve while some of the risks of the debt-ridden eurozone have abated.

“This environment means three things for currencies: investors will continue to look for yield; they will be more comfortable in moving along the risk spectrum; and a currency’s fundamentals will matter more,” she said.