USDKRW has opened stronger and is........>

KOREAN WON: USDKRW has opened stronger and is holding its gains following

broad-based USD strength overnight. The pair prints at 1124, up 0.4% on the day,

with yesterday's low of 1125 likely to act as the next technical hurdle to

overcome for the bulls. 

- 2-year US-Korea yield spreads are printing a new cycle high today at 93bps,

while in real terms, adjusting for long-term breakeven inflation expectations,

Korea's advantage has shrunk to just 19bps. 

- The ongoing drop in the Korean CDS is providing fundamental support for the

KRW but there is little further for default risk to drop, which will likely mean

the BOK will have to tighten policy if it is to avoid medium term won weakness.