Exports Remain Robust

Won opened stronger but has given back gains as the session wears on, USD/KRW last down 1.00 at 1158.45, off session lows of 1156.25. Having ground lower throughout the session yesterday the pair is hovering around the lowest levels since August 12.

• Data earlier showed the trade surplus widened more than expected, exports grew for the tenth straight month in August driven by sales of chips and automobiles. Exports rose 34.9%, shipments to China rose 26.8% while US exports rose 38%.
• Manufacturing PMI data was also released, the August figure printed 51.2 compared to 53.0 in July. The slow down represents the impact of lockdowns during the survey period, however Markit said that "businesses remained confident that this would pass, and activity would rise over the next 12 months. South Korean manufacturers commented that this recovery would be aided by the dissipation of the pandemic, which would help to reduce supply chain bottlenecks".
• On the coronavirus front new cases rose to 2,025, back over 2,000 after 1,372 on Tuesday due to fewer tests. Health authorities said while the toughened social distancing measures have contained daily cases, the growing number of variant infections is troublesome and there are plans to announce additional virus restrictions this week that will be applied throughout this month, especially to brace for the Chuseok holiday, which runs from Sept. 18-22
• Elsewhere Moody's revised up South Korea's growth forecast for this year by 0.5ppts to 4% citing strong exports, the upgrade brings the ratings agency forecast in line with the BoK's own estimate. Moody's also revised 2022 growth forecasts up to 3.2% from 3.0% previously.