Won Weaker Despite Upbeat Outlook

The won is weaker in early trade, USD/KRW pushed higher by a stronger greenback. The rate last changes hands at 1134.75 – the highest since March 15.

• Earlier in the session BoK Gov Lee said he expects growth and inflation to be faster this year, but that this won't necessitate early rate hikes. The positive assessment of the economy mirrors comments from President Moon earlier this week. Lee also touched on bond purchases, he noted the amount of purchases from the market depends on how quickly yields rise, as well as the reasons behind the rise. He said managing liquidty after the purchases was important, and that the bank could buy bonds without any difficulties. He also mentioned elevated yield spreads and long end inversion, for which he said the bank could adjust bond issuance via MSB sales.
• Data today showed South Korean produce prices rose 2.0% Y/Y in February, up from a revised 0.9% in January. The increase is attributed to a rise in oil prices and denotes the fourth straight month of gains.
• Elsewhere, South Korea reported 428 daily new coronavirus cases, back to above 400 after a brief dip below yesterday. There are still concerns of a potential resurgence as the AstraZeneca vaccine rollout for elderly citizens begins after a one-month delay over safety concerns.