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Spot USD/KRW Through 1423, Fresh Cyclical Highs

KRW

Spot USD/KRW has gapped higher at the open. We are above now above 1423, fresh cyclical highs and +0.95% on Friday's closing level. The 1 month NDF closed in NY on Friday around 1420, so we are at slightly worse levels this morning. Note BoK Governor Rhee and Finance Minister Choo will attend a parliamentary session today (in a little over 30mins, at 10am local time).

  • The BoK and MoF could be pressed on financial market issues, particularly the on-going fall in the won and further steps to stabilize FX market sentiment.
  • Comments have just crossed the wires from the Vice Finance Minister asking officials to closely monitor the market.
  • The BoK and National Pension Service (NPS) also announced a $10bn swap agreement late last week. NPS also stated it had raised its short term FX funding limit to $3bn from the previous $600mn. Both measures are designed to reduce upward pressure on USD/KRW spot when NPS buys overseas assets.
  • Still, it remains to be seen what else can be done. Cross asset signals remain a meaningful headwind. Outside of continued broad based USD gains, equity sentiment remains soft. The Kopsi is down a further 1.8% so far today. We are now at fresh YTD lows for the index.
  • The domestic data calendar is quiet until September consumer confidence prints early tomorrow.

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