FXstreet.com (Barcelona) - After the Bank of Korea (BoK) announced the cut of its base rate by 25bps, to 3.00%, the Standard Chartered Research Team thinks the BoK is also likely to downgrade the GDP and CPI forecasts in its regular revision of macro forecasts scheduled today. "Our policy-rate view for 2012 and 2013 is now under review" says the bank.
As Standard Chartered Analysts note: "The cut is a short-term negative for the Korean won (KRW) as it signals concern over the extent to which external economic weakness will impact domestic activity. Near-term resistance for USD-KRW lies at 1,146 (the intra-day high on 9 and 11 July). However, this is constructive for bond inflows – an important driver for Korea’s financial account. USD-KRW implied volatilities will likely remain on a downward path, despite this surprise move, and we retain a short-term Overweight recommendation on the KRW, prepositioning for a broader cyclical recovery late in 2012."
As Standard Chartered Analysts note: "The cut is a short-term negative for the Korean won (KRW) as it signals concern over the extent to which external economic weakness will impact domestic activity. Near-term resistance for USD-KRW lies at 1,146 (the intra-day high on 9 and 11 July). However, this is constructive for bond inflows – an important driver for Korea’s financial account. USD-KRW implied volatilities will likely remain on a downward path, despite this surprise move, and we retain a short-term Overweight recommendation on the KRW, prepositioning for a broader cyclical recovery late in 2012."
