October 08, 2024 22:43 GMT
KRW: 1 Month USD/KRW Down As FTSE Adds South Korean Bonds To WGBI
KRW
Spot USD/KRW ended extended Tuesday trade at 1346.30, slightly weaker in won terms versus end Monday levels (0.15%). The 1 month NDF finished up at 1339 though in NY on Tuesday a won gain of around 0.30%. The pair fell as headlines crossed of FTSE Russell including South Korean bonds in the WGBI bond index. Note today is a local public holiday in South Korea.
- The WGBI inclusion will be added from Nov 2025 (see this link) and could see potentially close to $70bn in inflows. Bond inflows tend to more FX hedged than equity inflows, so the FX impact could be more muted in the longer term.
- Elsewhere, the better tone to US tech related equities is another potential positive. The SOX rose 1.33% in US trade on Tuesday, while the MSCI IT gained 1.89%. Some offset though may come from more China stimulus doubts.
- To recap, the Kospi fell 0.61% yesterday, while offshore investors sold -$347.9mn of local shares.
- The local data calendar is empty ahead of tomorrow's BoK decision. A clear majority of sell-side economists expect the central bank to start the easing cycle with a 25bps cut.
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