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1 Month USD/KRW Seeing Little Follow Through To Monday Pull Back


1 month USD/KRW has seen little further downside in the first part of Tuesday trade. The pair was last near 1350.5, around +0.30% above Monday NY closing levels. This comes despite a better onshore equity backdrop, with the Kospi up nearly 1% in the first part of trade today.

  • Broader USD sentiment (ex AUD) has stabilized, which is likely working against the won, while USD/CNH also remains close to recent highs.
  • There also remains little foreign sponsorship of a modestly firmer equity backdrop, see the chart below. Rolling 1 month changes in Kospi and MSCI IT index are comfortably off recent lows, but net equity outflows are nearly $3.4bn for the past month, which is back to mid 2022 lows.
  • Some negative spill over may be evident from outflow pressure from China (via the Northbound Stock Connect), but until we see a firmer equity inflow backdrop it may remain a constraint on won gains.

Fig 1: South Korean Equity Inflows Lagging Better Equity Backdrop

Source: MNI - Market News/Bloomberg

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