Goldman Sachs: Scope For KRW Catch-Up On Faster Sequential Growth

Goldman Sachs note that "USD/KRW has lagged the move lower in
USD/Asia and USD/CNY. We think that positioning in USD/KRW is
already quite short while economic data has been weak recently. Q2 GDP
growth dropped to a two-decade low, driven by the sharp deterioration in
exports. While the meaningful downside surprise in Q2 GDP lowered our
full-year forecast to -1.3% (vs. -0.9% previously), we continue to expect a
strong sequential rebound in Q3 under our current base case views from
ongoing gradual recovery in domestic activity as well as a sharp rebound
in external demand. Recent high frequency data, including workday
adjusted exports during early July, are supportive of our base case view.
The BOK in its July meeting kept an overall neutral stance after 75bp in
cuts to its policy rate to May. The central bank also did not provide
meaningful details on its bond purchase program. Looking ahead, we
are bullish on the Won, driven by a pro-cyclical global growth, a
favorable outlook for the technology sector and a weaker USD view."