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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
1 month USD/KRW got back to mid-June lows near 1301 early. We are slightly higher now at 1302. A break below 1300 would have the market targeting a move back to the 1295 region. Note the pairs remains comfortably above its 50-day MA, which currently sits at 1286.35.
- The wedge between USD/KRW and the Kospi has diminished somewhat, see the chart below. The Kospi has pushed up again today, +0.90% so far.
Fig 1: The Won Plays Some Catch Up With Firmer Onshore Equities
Source: MNI/Market News/Bloomberg
- Offshore investors haven't been participating much in the rebound, although the rate of outflows has certainly slowed, see the second chart below.
- Arguably net inflow momentum should be higher given the extent of the Kospi rebound, +4% over the past month.
- We may need to see increased participation from this investor base to drive further lows in USD/KRW.
- The other interesting development is that Bloomberg has reported the Korean National Pension Service has engaged in some tactical hedging of overseas investments.
- This isn't a game changer for the won, but is does highlight the sensitivity around FX levels at the moment.
Fig 2: Kospi and Net Equity Flows From Offshore Investors
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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