Sovereign interest supportive
Widening trade and current account surpluses have conspired to push USDKRW to a new 5½ year low. Receding fears over the impact of yen weakness have also helped – surprisingly Korean exporters have managed to gain market share abroad over their Japanese competitors despite the fall in JPYKRW. For more on this see “The yen and the premature demise of the Korean exporter” by Duncan Wooldridge dated April 10th. With policymakers taking note, next week’s official reserve data could confirm a declining appetite on the part of the Bank of Korea ‘to lean against the wind’ in the face of ongoing currency appreciation pressure. The price action during April at least hints at this.
Read the full report: UBS