Holds Above 1400 On Equity Weakness

1 month USD/KRW got above 1413 late yesterday, before dipping sub 1400, post JPY intervention. We ended the NY session around 1406.50. Note onshore spot closed yesterday at 1411.30. Earlier PPI data showed easing upstream price momentum in August (8.4% y/y from 9.2% y/y), although this may not shift the BoK from a more aggressive rate hike in October.

• The lead for onshore equities today is not a great one. Tech underperformed overnight (the SOX down by 2.8%). Yesterday, the Kospi slid 0.63% to 2332.3 and is getting close to July lows sub 2300.
• Offshore investors sold a further $76.1mn of local equities, bringing week to date net outflows to -$371.2mn.
• The other focus point will be on speculation that the BoK will raise rates more aggressively (i.e. 50bps) at the next policy meeting (October 12). FX weakness could be a factor in determining the size of the move. New forward guidance is expected at the next meeting as well, according to recent comments from Governor Rhee.
• Elsewhere, a currency swap agreement is expected to be entered into between the BoK and the National Pension Service (NPS), which has a large pool of offshore assets to draw on.