USD/KRW: BoK on hold to check won's recovery – SocGen
USD/KRW has reversed from a trend high of 1181 last week to 1163. Economists are split on the possibility of a 25bp rate increase in South Korea on Thursday. The Korean won strengthening could come under pressure if the Bank of Korea stays on hold, in the view of economists at Société Générale.
See: USD/KRW to hover around 1150-1180 as BoK set to hike rates – Credit Suisse
BoK may refrain from hiking rates
“Around half (10 out of 19) of analysts polled by Bloomberg pencil in a status quo, including our own economists. We think the BoK will bide its time in light of rising COVID-19 infections and instead will tighten 25bp to 0.75% in October. We think this will probably be followed by 100bp in 2022.”
“No change in policy could, in theory, check the won’s progress, and we suspect that the direction of stocks will be the swing factor instead.”
“USD/KRW has staged a steady up move after breakout above the upper band of a multi-month triangle. It recently reached an interim projection for the move at 1184/1186. An initial pullback is underway, however, the triangle limit at 1140/1137 should provide support.”
“Beyond 1184/1186, the pair could extend the uptrend towards 1197 and perhaps even towards 1210, the 61.8% retracement from March 2020.”
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FXStreet Insights Team
FXStreet
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