Early Positivity Fades, Authorities Still On Guard Around FX Outlook

Spot USD/KRW couldn't break lower earlier, the low in the pair was around 1372. We now sit back close to 1377, while the 1 month NDF is slightly above NY closing levels. Whilst onshore equities are higher to the tune over 2.6%, this largely reflects catch up to moves while South Korea markets were shut in recent days. Higher USD/CNH levels, back above 6.9250, has helped trim earlier positive won sentiment.

• The first 10 days of trade data for September painted a bearish picture, although holidays distorted the y/y picture (down sharply for both exports (-16.6%) and imports (-10.9%), with a $2.44bn trade deficit). Average daily exports were still +9% y/y.
• Chips exports were positive as well, although major country exports were negative, but that likely partly reflects the day count issue (China at -20.9%).
• The BoK minutes are still to come. Earlier comments from today noted the BoK will strengthen the monitoring of capital flows and FX markets.
• We are still some distance from recent highs of around 1390 (for the 1 month NDF), but clearly the authorities mindful of a rebound and are unlikely to welcome a rapid depreciation through 1400.