Exports Continue Recovery

The won is stronger in early trade, USD/KRW down 2.75 to 1107.90 – the pair dropped at the open playing catch up with the weaker greenback.

• Vice FinMin Lee was on the wires earlier noting that there was a high possibility inflation would rise above 2% in Q1 due to base effects and commodity prices. He added the government will announce measures tomorrow to designed to stabilise prices, May CPI figures are released tomorrow.
• Data earlier showed the trade balance widened to $2.925bn, lower than the expected $3.751bn. The gain was driven by exports rising 45.6% in May, lower than estimates of a 48.9% rise but still a robust print and the biggest gain since 1988. Exports to China saw a rise of 22.7% while global electronics demand remains strong with semiconductor shipments 24.5% higher.
• Other data showed manufacturing PMI fell to 53.7 in May from 54.6 previously. Commenting on the latest survey results, Usamah Bhatti, Economist at IHS Markit, said: "South Korean manufacturers continued to report a sustained, yet softer improvement in the health of the sector, with the latest Manufacturing PMI easing to the softest level recorded for four months. This came as manufacturers reported an easing in rates of growth in both output and new orders in May. Moreover, firms also reported a significant slowdown in new business inflows from international clients, as export orders expanded at the softest pace since October 2020. "That said, South Korean goods producers remained buoyed by increased demand, therefore raised staffing levels for the third month in succession."
• Elsewhere South Korea reported 459 daily new coronavirus cases on Tuesday, remaining in the 400s for the third consecutive day, it is the first time that the daily caseload has stayed around 400 for three days in a row since late March, just before the fourth wave of the pandemic hit the nation. Health authorities are easing distancing rules for vaccinated people to speed up the inoculation drive. While up to eight immediate family members are currently allowed to gather, those who have received at least one shot of COVID-19 vaccines are partly exempt from the social distancing rule.