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Won Gains Capped In Early Trade


The won has been supported in early trade, the 1 month USD/KRW NDF is down slightly on NY closing levels. The pair hasn't seen much downside beyond 1387 (last 1388.50) though. Onshore equities are higher, with the Kospi at +0.70% so far, but we are away from earlier highs (+1%). USD/CNH is also slightly higher, edging back above 7.0050, which has likely capped won gains to a degree.

  • There is still a wedge with USD/KRW and onshore equities, although the gap has closed somewhat, largely due to some equity market catch up to the downside (see the chart below).
  • Yesterday's lows were around 1383/84, while from late last week we got close to 1380, so these levels could be watched on the downside. On the topside, beyond 1395 creates the risk of intervention, either physical or verbal.
  • We also await the outcome of today's meeting between the authorities and exporters/importers.

Fig 1: USD/KRW & Kospi Trends

Source: MNI - Market News/Bloomberg

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