Won Gives Back Some Of Early Post Election Gains

USD/KRW was offered on Seoul’s return to market, with the wider risk-positive backdrop flagged elsewhere (on the back of at least some hope for an eventual diplomatic solution when it comes to the Russia-Ukraine conflict) and the Conservative Party’s unseating of the incumbent ruling party in the South Korean national election (market watchers have pointed to a more hands off approach when it comes to market moves, in addition to Conservative focus on private sector-led growth as fuel for KRW’s bid) supporting the currency. The shunt lower in crude prices since Tuesday’s close also supports the KRW (given Korea’s status as a net energy importer).

• Still, the wider USD uptick has seen USD/KRW pare back some of its early decline, last printing -7 at ~KRW1,230. Note that some questions have also done the rounds re: the power of President-elect Yoon when it comes to enacting his policies, given the fact that the current ruling party holds a supermajority in the national assembly until April ’24, which could limit his policymaking capability.
• Technically, bears need a shift below the Jan 28 high (KRW1,207.25) to start turning the tide in their favour. Meanwhile, Tuesday’s cycle high (KRW1,238.5) presents the initial level of resistance.
• On the local data front, we have seen a steady total household lending figure for the month of February, with that print edging back from the late ’21 all-time high in recent months.