Won Moves Back Towards Multi-Month Highs

The won is stronger on Thursday, USD/KRW down 3.05 at 110.15, moving back towards the lowest levels since February.

• Data earlier showed foreign reserves rose to a record high in May on USD weakness improved value of non-dollar assets, foreign reserves came to $456.4bn in May, up $4.15bn from the previous month
• South Korea reported 681 daily new coronavirus cases on Thursday, in the 600s for the second consecutive day due to continued cluster infections, and the country's inoculation drive is on a roll with a smooth vaccine supply.
• Finance Minister Hong voiced concerns about one-sided expectations that housing prices will likely continue to rise in the second half. He said housing prices may stabilise as the government has a strong commitment to curbing high-flying home prices. He also cited talks of an early tapering by the U.S. Federal Reserve and South Korea's tougher lending rules to slow household debt growth as factors that could trigger some corrections in housing prices.
• Elsewhere, government ministries and state agencies have requested a 6.3% hike in their budgets for next year as they seek to cope with post-pandemic economic recovery and implement key policy projects, said the MOF. Their budget proposals amount to a combined KRW 593., up KRW 35.2tn from the previous year. The MOF said it plans to maintain an expansionary fiscal policy next year to underpin an economic recovery from the pandemic, but it will also seek to enhance fiscal soundness amid mounting national debt. Budget proposals will be finalised and submitted it the National Assembly by Sept. 3 for approval.