USDKRW continues to trade around the.....>

KOREAN WON: USDKRW continues to trade around the 1080 level with today's muted

price action reflecting very little change in the real yield differential

between the US and Korea.

- Korean real yields, even after adjusting for the marginally higher default

risk, remain higher than those of the US, but the gap continues to narrow

suggesting the won should exhibit a weakening trend.

- Also, with uncertainty stemming from Turkey and Italy, we could see CDS

spreads of even the safer emerging markets begin to rise. US junk bond yields,

which track Korean CDS spreads closely, have begun to edge higher amid increased

global uncertainty and while Korea's external balance sheet remains solid, any

threat to global growth could cause a spike higher, undermining the won.