Analysts at MUFG Bank, point out that the South Korean won will likely remain affected by the ongoing concerns on global economic growth and the tightening from the Federal Reserve. They forecast USD/KRW at 1250.00 by the end of the second quarter, and at 1230.00 by the fourth quarter.
“KRW depreciated this June on resuming capital outflows amid global growth and recession worries, with foreign investors sold about a net USD4.2 bn of Korea’s local equities in the month after a net buying of USD170 mn in May. Notably, the won even breached the 1,300-mark for the first time in 13 years on June 23. As an export-driven economy, a negative exports growth in its early trade data also dragged on the KRW.”
“To counter growing inflationary pressure, the South Korean government on June 19 announced a package of emergency measures, including expanding tax cuts on fuel consumption to a legal cap of 37% from the current 30%, starting July 1 until the end of this year, and doubling tax deduction rates on credit card use for public transit services to 80%. These new measures could at least offer some support to domestic consumers and businesses amid the uncertain economic environment, in turn supporting the economy and the KRW.”
“Risk appetite is likely to remain highly volatile in the near term as uncertaiinties over external factors including global stagflation and the Fed’s policy trajectory could continue to drive KRW’s movement.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.