Won Has Best Week Since 2008
Last week 1 month USD/KRW dropped by 6.41%, the largest weekly drop since December 2008, see the chart below. This put the pair just below 1314. We are below the 200-day EMA (1317.14), although the simple 200-day comes in just under 1301. Note onshore spot ended last week at 1318.75.
- The local data calendar is fairly quiet this week, with export and import figures for October due early tomorrow.
- The offshore news remains positive for won, with China's support measures for the property market likely to have a positive spill over effect for the currency.
- We noted last week given the rate of won gains we may see the pace of appreciation slow, although the better macro backdrop clearly provides an offset. The authorities also want to see less upside pressure from the won via domestic capital outflows, after they asked public institutional investors to raise hedging late last week.
- Positive equity inflow momentum may also continue from offshore investors, with +$1.26bn in net inflows last week, of which +$688.4mn came in during Friday's session.
Fig 1: USD/KRW 1 month NDF - 1 Week Rate Of Change
Source: MNI - Market News/Bloomberg