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FX Stabilization Rhetoric Steps Up

KRW

Rhetoric around FX stabilization appears to have increased from the Korean authorities, which comes after USD/KRW got close to 2020 highs late last week.

  • The South Korean Finance Minister Choo Kyung-Ho and BoK Governor Rhee Chang-yong met this morning, with inflation, financial market volatility and policy coordination the topics of discussion.
  • The Finance Minister stated that stabilizing the FX market is needed and that the Finance Ministry will work closely with the BoK on FX stabilization. This appears to be a step up in rhetoric around the won.
  • Spot USD/KRW traded above 1290 last week before sentiment improved. We opened around 1277 today. Similar levels seen for the 1 month NDF after closing at 1278.7 in NY on Friday.
  • The BoK Governor also appeared to rule out strong rate hikes in the near term, stating that a 50bps hike can be assessed after seeing data for July-August.
  • Offshore equity drivers will remain important. The Philadelphia Semiconductor index rose 5.1% through Friday's session, outperforming the broader rally in US equities. This came after the Kospi surged 2.1% during the local session on Friday. Samsung is also in discussions to raise semiconductor prices by 20% this year.
  • Offshore investors added $187mn in Korean equities on Friday. Weekly net outflows were still -$684mn, but this is down from the pace seen in April.
  • China data can also influence today, with the monthly activity run for April on tap, while USD/KRW sensitivity to USD/CNH moves is likely to remain strong.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
EM BulletHomepagemarkets-real-timeBulletMarketsEmerging Market NewsForeign Exchange Bullets
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
EM BulletHomepagemarkets-real-timeBulletMarketsEmerging Market NewsForeign Exchange Bullets

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