Is April's best-performing currency set for further gains?

How far can the South Korean won go?

South Korea's won outperformed major global currencies in April, and according to HSBC, investors can expect the currency to continue rising this year.

Over the past month, the strengthened 3 percent against the greenback, its biggest monthly rise in nearly a year. The figure is well above the 1 percent rise, the euro's 0.7 percent gain and the 0.7 percent decline in April.

The gains come after the International Monetary Fund said two weeks ago that the won was undervalued by as much as 8 percent and warned South Korea to limit foreign exchange intervention.

JUNG YEON-JE | AFP | Getty Images

"The Korean won has been amongst our expected outperformers in the Asian space for 2014 and that remains the case. The large current account surplus continues to provide underlying inflows supporting currency appreciation," Dominic Bunning, senior FX strategist at HSBC, told CNBC.

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Data last week showed Asia's fourth-largest economy expanded 0.9 percent in the first three months of the year, the same pace as the fourth quarter.

Meanwhile, the country posted a current account surplus of $7.3 billion in March, its highest in five months thanks to growing exports, which make up about half of the economy.

According to ANZ, the currency remains one of Asia's top safe-haven bets.

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"The fact that won has seen minimal impact from the geopolitical tensions in Ukraine, shrugged off reports last week that North Korea may be preparing another nuclear test, and ignored the North's live-fire drill near the border, is testament to the won's safe-haven status in the region," said Khoon Goh and HuiYing Chan, senior forex strategists at ANZ.

But while HSBC remains bullish on the currency, ANZ believes the won's appreciation is overdone.

"The won is looking stretched in real exchange rate terms, especially against the yen. Once month-end flows are out of the way, we expect some correction in the currency over the month of May, which historically tends to occur," continued Goh and Chan.

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South Korean equities saw nearly $3 billion in foreign inflows during April and according to ANZ, the won has typically seen a correction when some of those equity flows are unwound.

"While April is a seasonally strong month for the won, the month of May tends to be less kind. USD/KRW has risen for the past four consecutive years in May. While past performance is no indication of future performance, the historical pattern at least points to a decent chance of a correction in the won during May," the ANZ analysts said.