USD/KRW: BoK neutral shift supports KRW – DBS

FXStreet Insights Team FXStreet

The BoK’s move to drop rate-cut language has offered the KRW some support, even as officials flag rising overseas investment by young Koreans and call for more cautious FX hedging by the national pension fund, DBS' Senior FX Strategist Chang Wei Liang notes.

Youth outflows raise FX concerns

"USD/KRW could stabilize at around 1460 with the BOK removing references to a rate-cutting stance it its policy statement, after keeping rates on hold. A neutral stance should lend support to the beleaguered KRW, with weakness driven by resident outflows."

"BOK Governor Rhee highlighted a worrying trend of youths investing heavily in overseas stocks, and he also urged the National Pension Service to adopt more 'strategic ambiguity' in its FX hedging approach, given that its FX actions have significant macro impact."

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