MNI BRIEF: Case For ECB Cuts Strengthening, Accounts Show

MNI INTERVIEW2: Germany Faces Stagnation -Former Experts Chair

MNI BRIEF: Smaller Firms Split Over Wage Hikes - BOJ Report

CORRECTED-MNI: Changing Brazil Fiscal Target Not "Plan A"

MNI BRIEF: PBOC To Curb Any Overshooting Of The Yuan-MPC

MNI China Daily Summary: Wednesday, April 3

MNI: US FEB TRADE GAP -$68.9B VS JAN -$67.6B

MNI: US JOBLESS CLAIMS +9K TO 221K IN MAR 30 WK

MNI: CANADIAN FEB TRADE BALANCE CAD +1.4 BILLION

MNI BRIEF: Poilievre Calls QE 'Scam' And Would Limit BOC Remit

MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

MNI BRIEF: Lawmakers Signal Tough Hearing For BOC's Macklem

© 1982-2023 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

Goldman's Recommends Short CNH/KRW

CNH
With the re-opening hopes dampened (at least for the time being), we expect the CNH to underperform the KRW going forward. China's economic growth is expected to remain sluggish in the next few months (underpinned by multiple waves of local Covid outbreak, ongoing dynamic Zero-Covid policy and property market deleveraging measures). On a multi-month view, the current account is likely to deteriorate as exports slow, and imports pick-up.

  • Meanwhile, the KRW has underperformed NJA FX for the past year (down almost 16% vs the US dollar year-to-date), driven by a sharp deterioration in the trade balance and portfolio outflows. However, we expect Korea’s current account to improve over the coming quarters from around flat in Q3-2022 to 4% of GDP by Q4-2023, driven by stabilizing terms of trade, greater procyclicality of imports than that of exports during cyclical downturns, and fiscal tightening of around 2% of GDP in the pipeline.
  • Given our view that the KRW will outperform NJA FX and CNH will underperform, on a multi-month view, we recommend going short CNH/KRW (entry 195, target 180, and stop loss 203). Key risks to this trade: If China re-opens sooner than expected (our baseline is Q2-2023, although a clear path to re-opening could prompt a CNH rally), or if there is a material risk-off/global equity market sell-off pushing the KRW weaker.
EM BulletFixed Income BulletsHomepageBulletMarketsEmerging Market NewsForeign Exchange Bullets

To read the full story

Close

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.