BoK Governor Rhee - Rate Hikes Alone Can't Turnaround The Won

USD/KRW spot is close to 1430. In line with broad USD gains across the USD/Asia space. Local equities have continued to weaken (now down close to 2.5%). Wide ranging comments from BoK Governor Rhee have come across as hawkish but haven't impacted FX sentiment a great deal.

• The Governor, who is speaking in front of South Korean lawmakers, has noted the supports for the currency - still expected to see a current account surplus this year, FX reserves and that the current situation isn't like 1998 or 2008.
• He also stated that while a currency swap with the Fed would be nice it isn't necessarily needed.
• On FX specifically, the weaker currency is keeping imported energy costs from falling. Rhee also stated rate hikes alone won't curb won weakness. If investment abroad returns it would reduce the need to hike rates (presumably via the strengthening FX channel reducing import costs).
• The BoK also needs to take into account the higher Fed terminal rate and it expects another 75bps hike from the Fed.
• Such a backdrop continues to point to at least +50bps from the BoK at the next policy meeting, which is due in mid-October.