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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
KRW
- We expect Korea's 2021 BoP to be principally driven by: (1) Stagnant current account inflow; (2) Rising financial outflows, and (3) Declining BoK FX intervention.
- These are all conducive to a higher USDKRW profile. With our G10 FX strategists now firmly calling for a lower EURUSD profile, this will be the natural force which will push USDKRW higher as the global USD strengthens. Currently, the beta between USDKRW and the Broad USD Index (BBDXY) is at 0.74, close to a cycle high. A higher beta means USDKRW will more directly absorb the strength shown in the USD.
- Moreover, we don't expect the beta between USDKRW and the BBDXY to stay constant throughout the year. With our economists' expectation for the US economy to accelerate in 2H21 on the back of improving real data, we think the rise in US real rates can put further pressure on Asia FX. We pencil for USDKRW to reach 1180 by year-end.
- Fig.1: South Korea BoP breakdown
Source: BAML
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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