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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
KRW
USD/KRW has spent much of the session hovering just below 1290. The first 20 day export and trade balance figures disappointed, but the detail was better than the headline suggested. The BoK backed up the Ministry of Finance warnings around herding behaviour in FX markets.
- The first 20 days export numbers for June fell by -3.4% in YoY terms, versus 24.1% previously. Imports were 21.1% versus 37.8% last month. The trade deficit ballooned to -$7.6bn for the first 20 days of the month.
- However, taking into account working days the picture is more resilient. Average daily exports were up 11% in YoY terms. Chip exports also posted a modest YoY gain.
- As we have also highlighted previously, at face value, KRW is already priced for a slowdown in export growth, see the chart below. The dotted line presumes June full month exports fall by the same amount as suggested by the 20 day data.
Fig 1: KRW/USD YoY & Korean Export Growth
Source: MNI - Market News/Bloomberg
- The trade deficit clearly remains a headwind, see the second chart below. We continue to trend lower.
- This remains a source of won pressure, particularly in an environment of continuing portfolio equity outflows. Today local equities are higher, but the trend has been poor in recent weeks.
- BoK rhetoric around the FX markets is still likely to leave some caution around USD/KRW at current levels though. Spot is only 5 won away from fresh cyclical highs ~ 1295.
Source: MNI - Market News/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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