1 Month KRW Outperforming Slightly, BoK Deputy Gov States Tightening Cycle May Not Be Over

1 month USD/KRW sits modestly below NY closing levels, last just under 1304.50. This is slightly outperforming steady CNH trends, although higher beta majors are firmer against the USD (A$ and NZD), while USD/JPY is lower, which may also be helping at the margins. Spot is above yesterday's closing levels, but not by much, last in the 1306/07 region.

• Onshore equities are weaker, the Kospi last down close to 0.30%. This is in line with softer regional trends.
• We have heard commentary from FinMin Choo. He stated growth may be weaker than expected and that the 1.6% 2023 GDP forecast may need to be nudged down. For the FX though, the trade deficit is expected to improve further in June and that FX volatility has eased of late.
• The authorities also haven't decided whether power prices will rise in Q3, but Choo stated June CPI could fall to the 2% level.
• BoK Deputy Governor Lee Sang-hyeong also spoke and stated the tightening cycle is not over yet, and it is too early to relax about inflation, per Reuters reports.
• These points have likely aided KRW at the margins, but equity sentiment and broader USD swings will likely dominate for the rest of the session.