KRW Weakens Slightly; Vice FinMin Says Cognizant Of Elevated Asset Prices

Vice Finance Minister Kim Yongbeom on the wires saying that the government needs to be careful about the possibility of volatility increase in the asset market, but they will manage situation so that ample liquidity doesn't result in an excessive overheating in the asset market.

• The comments from Vice Finance Minister Kim Yongbeom are more geared towards equity markets, the KOSPI is at fresh record highs and has risen almost 20% since the start of November.
• USD/KRW flatlined in the session yesterday, moving in a narrow range from the mid-point of the session after some US dollar led movements. At 1081 the pair is firmly below the psychological 1100 level, and has fallen 2.5% so far in December. The next significant support level is 1080.
• The pair has opened slightly higher today, perhaps weighed upon by Covid-19 concerns. South Korea raised its Covid-19 alert level over the weekend as it struggles with a rise in infections. Gatherings of more than 50 will be banned in the from Tuesday, while gyms and karaoke bars will be closed. On Sunday 631 new infections were reported, the highest single day figure in nine months.
• Still, MNI sources note the won is overbought at these levels. It has gained almost 7% against the US dollar in Q4, which caused some concern the central bank could intervene to protect exporters. However, it does not seem to have had too much of an impact on exporters yet, with data last week showing largest current-account surplus since September 2017.
• Bank of Korea Governor said at the policy meeting in November the bank would step in to curb herd behaviour in FX, but did note that appreciation appears to be having less of an impact on export performance than in the past.
• As a note President Moon's cabinet are scheduled to meet at 10am local time (0100GMT)