Won Strengthens As IMF Upgrades Growth Forecast

The won slightly stronger to start the day on Friday, USD/KRW last down 0.65 at 1132.90, retreating from yesterday's high of 1136.35.

• Data earlier in the session showed consumer confidence rose to 100.5 in March, up from 97.4 previously. This is the highest reading since January last year, and as such is the first reading in 10 months that shows consumers optimistic about the economy. The confidence is attributed to the start of the vaccination programme. It comes after another set of robust retail sales data from South Korea earlier this week.
• The IMF are positive on South Korea's economy, the body now forecasts the South Korean economy to grow 3.6% this year, up from its estimate in January of 3.1%. The IMF said South Korea is expected to recover this year, "supported by a gradual normalization of COVID-related factors and stronger external demand." The IMF's projection is well above the growth estimates made by the OECD and the BoK, at 3.3% and 3.0%, respectively. The new estimates took into account the anticipated impact of the latest KRW 15tn extra budget.
• US President Biden has issued a warning following the North Korean missile test yesterday. "There will be responses if they choose to escalate," Biden said Thursday, adding "we will respond accordingly."
• There could be some caution on the coronavirus front, South Korea reported 494 daily new coronavirus cases, above 400 for the third straight day Friday, prompting health authorities to extend current distancing rules by another two weeks amid looming concerns over a spike in new infections. "The government will extend the current distancing levels and the gathering ban on five or more for another two weeks starting next week," Prime Minister Chung said earlier today.
• Elsewhere, South Korea will increase efforts to ease growing inflationary pressure as hikes in global grain prices have jacked up prices of processed products. Vice FinMin Yong said: "People have felt higher price pressures as prices of processed goods, such as ready-to-eat steamed rice, bread and tofu have increased in line with hikes in global grain prices since the second half of last year."