Bank of Korea (BOK) Governor Rhee Chang-yong said at the press conference following the monetary policy meeting said that “Thursday's decision should not be taken as indicating the tightening cycle is over.”
Earlier on, the South Korean central bank left its policy rate unchanged at 3.50%, as expected. The BOK lowered its inflation forecast from 3.6% to 3.5% for this year.
US Dollar To South Korean Won (USD/KRW) Pair Could Suffer Further Losses TeleTrade Comments 06.10.2022 13:54 USD/KRW faced stiff resistance near 1444 earlier this week resulting in a sharp decline. The pair could suffer further losses in case support at 1393/84 fails, economists at Société Générale report. Defending 1393/84 can result in a bounce towards 1426 “USD/KRW is in vicinity to potential support at 1393/1384 representing the daily Kijun line. Defending this zone can result in a bounce towards 1426, the 61.8% retracement of the pullback and 1444. It would be interesting to see if the pair can re-establish beyond this hurdle.” “In case the support at 1393/1384 gets violated, a retest of 50-DMA near 1360 is likely.”
South Korean Won To U.s. Dollar Spot Exchange Rate (exkous)
The Prospect Of A More Aggressive 50 bps Hike To 3.00% Has Increased In South Korea TeleTrade Comments 07.10.2022 12:10 Economist at UOB Group Ho Woei Chen, CFA, comments on the latest inflation figures in South Korea and the upcoming BoK event. Key Takeaways “South Korea’s headline inflation edged lower to 5.6% y/y in Sep, signalling it has likely peaked at more than two-decade high in Jul (6.3% y/y) as oil prices eased. However, core inflation rebounded to 4.5% y/y which keeps concerns on the second-round effects from a potential wage-price spiral.” “The trajectory remains for headline inflation to stay in the 5%-6% y/y range in the next few months until 1Q23, averaging around 5.2% and 3.5% for 2022 and 2023 respectively.” “Market’s expectation is gravitating towards a larger move by the BOK next week (12 Oct) amidst high domestic inflation and a more hawkish posturing from the US Fed. While we see a 25bps hike in the 7-day repo rate to 2.75% on 12 Oct as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased.” “Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BOK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BOK’s post-decision press conference next week.” “South Korea’s advance 3Q22 GDP is due on 27 Oct. Further recovery in private consumption on the back of normalizing activities and an improving labour market will help to make up for slowing momentum in exports and investments. However, GDP growth is still expected to moderate. Our forecast is at 0.1% q/q, 2.8% y/y for 3Q from 0.7% q/q, 2.9% y/y in 2Q22.”
View Of The US Dollar To South Korean Won (USD/KRW) Pair Remains Bullish TeleTrade Comments 10.10.2022 11:54 USD/KRW has breached its long-term channel. This move raises thoughts of a potential move to 1, 597/1, 600, in the opinion of analysts at Credit Suisse. Current correction seen as a temporary pause “USD/KRW has seen a major breakout above its long-term channel in August, which sets the market on course for an accelerated move higher. Whilst the current correction is seen as a temporary pause after RSI has reached oversold levels across all time frames, our core USD/KRW view remains bullish.” “We think further ascent to the 78.6% retracement of the 2009/2014 uptrend at 1, 471 is likely to follow. Should we also see a direct break higher here, this would raise a serious prospect of eventually reaching 1, 597/1, 600 – the 2009 high.”
Expectations Regarding The Bank Of Korea (BoK) Decision TeleTrade Comments 11.10.2022 09:58 The Bank of Korea (BoK) will hold its Monetary Policy Committee (MPC) meeting on Wednesday, October 12 at 01:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of six major banks. At the last meeting on August 25, the bank hiked rates by 25 basis points (bps) to 2.50%. Now, the BoK could increase rates by 50 bps to 3% though some banks call for another 25 bps hike. ANZ “We expect the BoK to hike its policy rate by 50 bps against a backdrop of persistent price pressures and rising concerns about stability. The BoK has made it clear that inflation will remain its top priority if it stays between 5-6%. The latest September datashowed the headline print at 5.6% YoY, which is likely to pick up in October amid hikes to electricity and city gas prices, before moderating gradually thereafter. A 50 bps rate hike by the BoK would help contain the negative policy rate differential with the US and complement recently announced market stabilisation measures.” SocGen “We expect a unanimous decision to hike rates by 25 bps from 2.50% to 2.75%. Persistent inflation concerns and the short-term ‘forward guidance’ until the end of this year support continued rate hike action in October. We maintain our base-case scenario for a terminal BoK policy rate at 3.0% after two 25 bps hikes in October and November, which is in line with the BoK’s implicit, near-term forward guidance that was hinted at quite a few times by Governor Rhee. Of course, we will closely monitor Governor Rhee’s press conference for any long-term forward guidance on monetary policy.” UOB “While we see a 25 bps hike in the 7-day repo rate to 2.75% as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased. Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BoK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BoK’s post-decision press conference.” Standard Chartered “We expect the BoK to hike the policy rate by 50 bps to align with the Fed and contain inflation. If the BoK hikes by only 25 bps in October and the Fed by 75 bps in November, the rate differential would go beyond 1%. BoK’s governor signalled that the central bank will aim to maintain a rate differential of less than 1%; we therefore expect a 50 bps rather than a 25 bps hike. We also do not see BoK hiking aggressively by 75 bps, given already high household debt and declining housing prices. Also, moderating CPI should ease pressure on the BoK for more hawkish hikes. We expect the BoK to hike by 25 bps each in November 2022, January 2023 and February 2023 to control inflation (which remains above 5%).” ING “We expect the BoK to raise interest rates by 50 bps, given the faster-than-expected rate hike by the Fed coupled with persistently high domestic inflation.” TDS “Recent hawkish BoK comments, elevated and sticky inflation, and weaker KRW, all point to another 50 bps move at this meeting. While BoK is unlikely to follow the Fed toe to toe, further hikes are likely.” See:USD/KRWset to advance nicely towards 1, 597/1, 600 – Credit Suisse
Dollar Vs Won: South Korea Verbally Intervenes As Currency Drops
The USD/KRW Pair Driven By External Factors, Will Increase By The End Of The Year TeleTrade Comments 13.10.2022 14:21 Korean won snapped an eight-week losing streak, rising 1.3% against the US dollar in the first week of October. Nevertheless, economists at MUFG Bank expect a weaker KRW by the end of Q4 this year. KRW to be affected by sentiment in near-term “The KRW likely remains largely driven by external drivers near term. Given a persisting US dollar strength and global growth concern, particularly recessions in UK, Europe and US, we see the pro-cyclical KRW to remain under-perform relative to EM Asian currencies.” “Also, with a possible worsening of current account balance caused by deteriorating exports amid a softening semiconductor industry and weakening global demand, we see USD/KRW to move up to 1, 470 by the end of Q4 this year.”
Asia Forex Market: This Year Has Been Tough For Asian Currencies ING Economics 20.11.2022 12:04 This year has been toughforAsian currencies –hit by surging energy prices, the strong dollar, and in some cases central banks being a little slow to react. Their course in 2023 will again be determined by thedollar trend and also diverse local stories. We see 3-5% gains in Asian FX against the dollar in 2023, with the Korean won outperforming In this article Local and international factors are still uncertain Source:Shutterstock Local and international factors are still uncertain For all the effort that goes into forecasting Asian exchange rates, the last year has shown that apart from some short-lived deviations, dollar strength was the principal driving factor and EUR/USDprovided perhaps the best clue as to both direction and magnitude. Within this period, there were times when other drivers took over– energy dependence was pivotal
The Prospect Of A More Aggressive 50 bps Hike To 3.00% Has Increased In South Korea TeleTrade Comments 07.10.2022 12:10 Economist at UOB Group Ho Woei Chen, CFA, comments on the latest inflation figures in South Korea and the upcoming BoK event. Key Takeaways “South Korea’s headline inflation edged lower to 5.6% y/y in Sep, signalling it has likely peaked at more than two-decade high in Jul (6.3% y/y) as oil prices eased. However, core inflation rebounded to 4.5% y/y which keeps concerns on the second-round effects from a potential wage-price spiral.” “The trajectory remains for headline inflation to stay in the 5%-6% y/y range in the next few months until 1Q23, averaging around 5.2% and 3.5% for 2022 and 2023 respectively.” “Market’s expectation is gravitating towards a larger move by the BOK next week (12 Oct) amidst high domestic inflation and a more hawkish posturing from the US Fed. While we see a 25bps hike in the 7-day repo rate to 2.75% on 12 Oct as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased.” “Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BOK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BOK’s post-decision press conference next week.” “South Korea’s advance 3Q22 GDP is due on 27 Oct. Further recovery in private consumption on the back of normalizing activities and an improving labour market will help to make up for slowing momentum in exports and investments. However, GDP growth is still expected to moderate. Our forecast is at 0.1% q/q, 2.8% y/y for 3Q from 0.7% q/q, 2.9% y/y in 2Q22.”
View Of The US Dollar To South Korean Won (USD/KRW) Pair Remains Bullish TeleTrade Comments 10.10.2022 11:54 USD/KRW has breached its long-term channel. This move raises thoughts of a potential move to 1, 597/1, 600, in the opinion of analysts at Credit Suisse. Current correction seen as a temporary pause “USD/KRW has seen a major breakout above its long-term channel in August, which sets the market on course for an accelerated move higher. Whilst the current correction is seen as a temporary pause after RSI has reached oversold levels across all time frames, our core USD/KRW view remains bullish.” “We think further ascent to the 78.6% retracement of the 2009/2014 uptrend at 1, 471 is likely to follow. Should we also see a direct break higher here, this would raise a serious prospect of eventually reaching 1, 597/1, 600 – the 2009 high.”
Expectations Regarding The Bank Of Korea (BoK) Decision TeleTrade Comments 11.10.2022 09:58 The Bank of Korea (BoK) will hold its Monetary Policy Committee (MPC) meeting on Wednesday, October 12 at 01:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of six major banks. At the last meeting on August 25, the bank hiked rates by 25 basis points (bps) to 2.50%. Now, the BoK could increase rates by 50 bps to 3% though some banks call for another 25 bps hike. ANZ “We expect the BoK to hike its policy rate by 50 bps against a backdrop of persistent price pressures and rising concerns about stability. The BoK has made it clear that inflation will remain its top priority if it stays between 5-6%. The latest September datashowed the headline print at 5.6% YoY, which is likely to pick up in October amid hikes to electricity and city gas prices, before moderating gradually thereafter. A 50 bps rate hike by the BoK would help contain the negative policy rate differential with the US and complement recently announced market stabilisation measures.” SocGen “We expect a unanimous decision to hike rates by 25 bps from 2.50% to 2.75%. Persistent inflation concerns and the short-term ‘forward guidance’ until the end of this year support continued rate hike action in October. We maintain our base-case scenario for a terminal BoK policy rate at 3.0% after two 25 bps hikes in October and November, which is in line with the BoK’s implicit, near-term forward guidance that was hinted at quite a few times by Governor Rhee. Of course, we will closely monitor Governor Rhee’s press conference for any long-term forward guidance on monetary policy.” UOB “While we see a 25 bps hike in the 7-day repo rate to 2.75% as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased. Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BoK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BoK’s post-decision press conference.” Standard Chartered “We expect the BoK to hike the policy rate by 50 bps to align with the Fed and contain inflation. If the BoK hikes by only 25 bps in October and the Fed by 75 bps in November, the rate differential would go beyond 1%. BoK’s governor signalled that the central bank will aim to maintain a rate differential of less than 1%; we therefore expect a 50 bps rather than a 25 bps hike. We also do not see BoK hiking aggressively by 75 bps, given already high household debt and declining housing prices. Also, moderating CPI should ease pressure on the BoK for more hawkish hikes. We expect the BoK to hike by 25 bps each in November 2022, January 2023 and February 2023 to control inflation (which remains above 5%).” ING “We expect the BoK to raise interest rates by 50 bps, given the faster-than-expected rate hike by the Fed coupled with persistently high domestic inflation.” TDS “Recent hawkish BoK comments, elevated and sticky inflation, and weaker KRW, all point to another 50 bps move at this meeting. While BoK is unlikely to follow the Fed toe to toe, further hikes are likely.” See:USD/KRWset to advance nicely towards 1, 597/1, 600 – Credit Suisse
Dollar Vs Won: South Korea Verbally Intervenes As Currency Drops
The USD/KRW Pair Driven By External Factors, Will Increase By The End Of The Year TeleTrade Comments 13.10.2022 14:21 Korean won snapped an eight-week losing streak, rising 1.3% against the US dollar in the first week of October. Nevertheless, economists at MUFG Bank expect a weaker KRW by the end of Q4 this year. KRW to be affected by sentiment in near-term “The KRW likely remains largely driven by external drivers near term. Given a persisting US dollar strength and global growth concern, particularly recessions in UK, Europe and US, we see the pro-cyclical KRW to remain under-perform relative to EM Asian currencies.” “Also, with a possible worsening of current account balance caused by deteriorating exports amid a softening semiconductor industry and weakening global demand, we see USD/KRW to move up to 1, 470 by the end of Q4 this year.”
Asia Forex Market: This Year Has Been Tough For Asian Currencies ING Economics 20.11.2022 12:04 This year has been toughforAsian currencies –hit by surging energy prices, the strong dollar, and in some cases central banks being a little slow to react. Their course in 2023 will again be determined by thedollar trend and also diverse local stories. We see 3-5% gains in Asian FX against the dollar in 2023, with the Korean won outperforming In this article Local and international factors are still uncertain Source:Shutterstock Local and international factors are still uncertain For all the effort that goes into forecasting Asian exchange rates, the last year has shown that apart from some short-lived deviations, dollar strength was the principal driving factor and EUR/USDprovided perhaps the best clue as to both direction and magnitude. Within this period, there were times when other drivers took over– energy dependence was pivotal
The Prospect Of A More Aggressive 50 bps Hike To 3.00% Has Increased In South Korea TeleTrade Comments 07.10.2022 12:10 Economist at UOB Group Ho Woei Chen, CFA, comments on the latest inflation figures in South Korea and the upcoming BoK event. Key Takeaways “South Korea’s headline inflation edged lower to 5.6% y/y in Sep, signalling it has likely peaked at more than two-decade high in Jul (6.3% y/y) as oil prices eased. However, core inflation rebounded to 4.5% y/y which keeps concerns on the second-round effects from a potential wage-price spiral.” “The trajectory remains for headline inflation to stay in the 5%-6% y/y range in the next few months until 1Q23, averaging around 5.2% and 3.5% for 2022 and 2023 respectively.” “Market’s expectation is gravitating towards a larger move by the BOK next week (12 Oct) amidst high domestic inflation and a more hawkish posturing from the US Fed. While we see a 25bps hike in the 7-day repo rate to 2.75% on 12 Oct as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased.” “Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BOK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BOK’s post-decision press conference next week.” “South Korea’s advance 3Q22 GDP is due on 27 Oct. Further recovery in private consumption on the back of normalizing activities and an improving labour market will help to make up for slowing momentum in exports and investments. However, GDP growth is still expected to moderate. Our forecast is at 0.1% q/q, 2.8% y/y for 3Q from 0.7% q/q, 2.9% y/y in 2Q22.”
View Of The US Dollar To South Korean Won (USD/KRW) Pair Remains Bullish TeleTrade Comments 10.10.2022 11:54 USD/KRW has breached its long-term channel. This move raises thoughts of a potential move to 1, 597/1, 600, in the opinion of analysts at Credit Suisse. Current correction seen as a temporary pause “USD/KRW has seen a major breakout above its long-term channel in August, which sets the market on course for an accelerated move higher. Whilst the current correction is seen as a temporary pause after RSI has reached oversold levels across all time frames, our core USD/KRW view remains bullish.” “We think further ascent to the 78.6% retracement of the 2009/2014 uptrend at 1, 471 is likely to follow. Should we also see a direct break higher here, this would raise a serious prospect of eventually reaching 1, 597/1, 600 – the 2009 high.”
Expectations Regarding The Bank Of Korea (BoK) Decision TeleTrade Comments 11.10.2022 09:58 The Bank of Korea (BoK) will hold its Monetary Policy Committee (MPC) meeting on Wednesday, October 12 at 01:00 GMT and as we get closer to the release time, here are the expectations as forecast by the economists and researchers of six major banks. At the last meeting on August 25, the bank hiked rates by 25 basis points (bps) to 2.50%. Now, the BoK could increase rates by 50 bps to 3% though some banks call for another 25 bps hike. ANZ “We expect the BoK to hike its policy rate by 50 bps against a backdrop of persistent price pressures and rising concerns about stability. The BoK has made it clear that inflation will remain its top priority if it stays between 5-6%. The latest September datashowed the headline print at 5.6% YoY, which is likely to pick up in October amid hikes to electricity and city gas prices, before moderating gradually thereafter. A 50 bps rate hike by the BoK would help contain the negative policy rate differential with the US and complement recently announced market stabilisation measures.” SocGen “We expect a unanimous decision to hike rates by 25 bps from 2.50% to 2.75%. Persistent inflation concerns and the short-term ‘forward guidance’ until the end of this year support continued rate hike action in October. We maintain our base-case scenario for a terminal BoK policy rate at 3.0% after two 25 bps hikes in October and November, which is in line with the BoK’s implicit, near-term forward guidance that was hinted at quite a few times by Governor Rhee. Of course, we will closely monitor Governor Rhee’s press conference for any long-term forward guidance on monetary policy.” UOB “While we see a 25 bps hike in the 7-day repo rate to 2.75% as the base case, the prospect of a more aggressive 50 bps hike to 3.00% has increased. Thus, the odds are certainly tilted towards a higher terminal interest rate than our current forecast of 3.00% as BoK is likely to hike further in Nov (last meeting of 2022) and even into 1Q23 if inflation does not cool as fast as it hoped. We will get a better sense of that from BoK’s post-decision press conference.” Standard Chartered “We expect the BoK to hike the policy rate by 50 bps to align with the Fed and contain inflation. If the BoK hikes by only 25 bps in October and the Fed by 75 bps in November, the rate differential would go beyond 1%. BoK’s governor signalled that the central bank will aim to maintain a rate differential of less than 1%; we therefore expect a 50 bps rather than a 25 bps hike. We also do not see BoK hiking aggressively by 75 bps, given already high household debt and declining housing prices. Also, moderating CPI should ease pressure on the BoK for more hawkish hikes. We expect the BoK to hike by 25 bps each in November 2022, January 2023 and February 2023 to control inflation (which remains above 5%).” ING “We expect the BoK to raise interest rates by 50 bps, given the faster-than-expected rate hike by the Fed coupled with persistently high domestic inflation.” TDS “Recent hawkish BoK comments, elevated and sticky inflation, and weaker KRW, all point to another 50 bps move at this meeting. While BoK is unlikely to follow the Fed toe to toe, further hikes are likely.” See:USD/KRWset to advance nicely towards 1, 597/1, 600 – Credit Suisse
Dollar Vs Won: South Korea Verbally Intervenes As Currency Drops
The USD/KRW Pair Driven By External Factors, Will Increase By The End Of The Year TeleTrade Comments 13.10.2022 14:21 Korean won snapped an eight-week losing streak, rising 1.3% against the US dollar in the first week of October. Nevertheless, economists at MUFG Bank expect a weaker KRW by the end of Q4 this year. KRW to be affected by sentiment in near-term “The KRW likely remains largely driven by external drivers near term. Given a persisting US dollar strength and global growth concern, particularly recessions in UK, Europe and US, we see the pro-cyclical KRW to remain under-perform relative to EM Asian currencies.” “Also, with a possible worsening of current account balance caused by deteriorating exports amid a softening semiconductor industry and weakening global demand, we see USD/KRW to move up to 1, 470 by the end of Q4 this year.”
Asia Forex Market: This Year Has Been Tough For Asian Currencies ING Economics 20.11.2022 12:04 This year has been toughforAsian currencies –hit by surging energy prices, the strong dollar, and in some cases central banks being a little slow to react. Their course in 2023 will again be determined by thedollar trend and also diverse local stories. We see 3-5% gains in Asian FX against the dollar in 2023, with the Korean won outperforming In this article Local and international factors are still uncertain Source:Shutterstock Local and international factors are still uncertain For all the effort that goes into forecasting Asian exchange rates, the last year has shown that apart from some short-lived deviations, dollar strength was the principal driving factor and EUR/USDprovided perhaps the best clue as to both direction and magnitude. Within this period, there were times when other drivers took over– energy dependence was pivotal
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