Won Shakes Off Fall In Consumer Confidence

The won is stronger amid supportive risk sentiment, USD/KRW gapping lower at the open. The rate last down 3.50 at 1170.40. The rate continues to hold near its 2021 highs at 1181.00. Support is seen at 1157.30, a 23.6% retracement level of the move from 2021 low to high.

• There were reports that the national budget for 2022 should be bigger than the KRW 604 trillion earmarked for this year to finance the country's efforts to tackle the COVID-19 crisis. The leader of the ruling Democratic Party said the 2022 budget should include compensation for small merchants and small business owners affected by the pandemic, noting the current budget measures did not go far enough.
• On the coronavirus front there were 1,509 new cases in the past 24 hours, back above 1,500 after reporting 1,418 on Monday. Daily cases have now been above 1,000 for 49 consecutive days. Pm Kim told an anti-virus meeting earlier that the government will come up with more measures to speed up vaccinations as a recent surge in infections mainly came from people in their 20s and 30s, most of whom are unvaccinated; 51.2% of the population have now had their first dose of vaccine, while 23.9% have been fully vaccinated. The government aims to vaccinate at least 70% of the population by September to create herd immunity in November.
• Data earlier showed consumer confidence fell 0.7 points to 102.5, impacted by a spike in virus infections and denoting the second month of declines. The economic conditions sub index fell to 77 from 82.
• Meanwhile, AMRO increased its 2021 growth outlook for South Korea to 3.9% from its March estimate of 3.2%. AMRO cited solid recovery in exports and facility investment. The estimate is still lower than the 4% forecast by the BoK and 4.3% from the IMF.
• Elsewhere South Korea said yesterday that it had received SDRs worth $11.7 billion from the IMF in line with the organization's move to allocate its new asset reserves to member countries; in August the IMF approved a $650bn expansion of reserve assets to disburse to member countries.