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KRW: Spot USD/KRW Back Above 20-Day EMA On BoK Cut, JPY/KRW Firmer

KRW
EM BulletBulletSouth KoreaAPACEmerging Market News

The knee-jerk reaction in USD/KRW post the BoK's surprise rate cut was to spike higher. The pair got to 1396.25 and sits just below this level in latest dealings. Off around 0.30% for the session in won terms.  

  • Only 4 out of 22 economists surveyed by Bloomberg forecast the 25bps cut.
  • Given FX weakness has been a concern for the authorities, today's cut is a surprise. However, it may also signal the authorities can manage the FX through other avenues. We also had Rtrs reports from earlier this week around the National Pension Service selling USD as part of hedging adjustments.
  • Recent highs in USD/KRW rest at 1410.70. Today's bounce puts us back above the 20-day EMA.
  • The move should underpin won underperformance against currencies where central banks have scope to raise rates within EM Asia (such as BoJ). We highlighted upside JPY/KRW risks yesterday. The pair got to 9.2418 yesterday, but sits slightly lower now last near 9.2000. Yen is giving back some recent outperformance in the first part of Thursday trade
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The knee-jerk reaction in USD/KRW post the BoK's surprise rate cut was to spike higher. The pair got to 1396.25 and sits just below this level in latest dealings. Off around 0.30% for the session in won terms.  

  • Only 4 out of 22 economists surveyed by Bloomberg forecast the 25bps cut.
  • Given FX weakness has been a concern for the authorities, today's cut is a surprise. However, it may also signal the authorities can manage the FX through other avenues. We also had Rtrs reports from earlier this week around the National Pension Service selling USD as part of hedging adjustments.
  • Recent highs in USD/KRW rest at 1410.70. Today's bounce puts us back above the 20-day EMA.
  • The move should underpin won underperformance against currencies where central banks have scope to raise rates within EM Asia (such as BoJ). We highlighted upside JPY/KRW risks yesterday. The pair got to 9.2418 yesterday, but sits slightly lower now last near 9.2000. Yen is giving back some recent outperformance in the first part of Thursday trade