MNI China Daily Summary: Wednesday, July 10

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Won Firms As Authorities Focus On Speculative Factors Driving FX ​​

KRW

Spot USD/KRW opened higher this morning, touching just above 1345, but we are down sharply from this level now. The pair got under 1338, as the South Korean authorities stated they will monitor if speculative factors are driving FX moves. This follows earlier comments from the Finance Minister, which stated the authorities would manage risks so there is no negative FX impact on the economy. Hence the recent run of won depreciation is clearly catching the authorities attention. Spot has stabilized somewhat now, last just under 1340.

  • It may be the case that the 1345 level is somewhat of a short-term line in the sand. As we noted earlier, this level drew selling interest overnight.
  • The rhetoric from South Korean authorities doesn't change the macro backdrop for the won, but the short-term market may look to take profit on long USD positions and reset again at lower levels.
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