Volatile Start, As Official FX Rhetoric Steps Up

The first part of onshore FX trading has seen very little relief for the won. Spot USD/KRW opened close to 1375, in line with NY closing levels for the 1 month NDF, but we quickly rebounded. The pair was last at 1380, after trading above 1383 earlier. Dips in USD/KRW remain supported for now, but increased rhetoric from the South Korean authorities is creating more two-way price action in the pair.

• The BoK warned late yesterday that the won decline was quite fast, relative to the country's fundamentals. They will closely monitor trends and will take stabilization efforts if needed.
• Still, like other currencies in the region, so long as broader USD sentiment remains strong it may be difficult for USD/KRW to meaningfully turn lower.
• Weakness in JPY is also likely to be having a larger impact compact to elsewhere, given the similar export bases the two countries share.
• Today's data calendar only contains bank lending to household data.
• Onshore equities are higher but are away from opening highs. The Kospi last at +0.40%. Offshore investors have sold $140.4mn of local shares today, bringing week to date flows to -$595.0mn.