ING‘s Chris Turner reports that USD/KRW rebounded from 1335 after news that Korea’s National Pension Service may halt or reverse its forward-market Dollar selling. Authorities appear comfortable with recent Won gains after a 15% USD/KRW drop since June. ING favours consolidation in both USD/KRW and USD/JPY, seeing reduced Dollar selling in these pairs supporting the broader Dollar tone.
Won rally seen due for consolidation
“USD/KRW bounced off the lows today at 1335 after news emerged that Koreas National Pension Service could be halting, if not reversing, its USD/KRW sales in the forward market.”
“Remember, changes to NPS FX hedging were one of the measures introduced in June to help support the beleaguered won.”
“Todays news suggests Korean authorities feel that the won has come far enough for the time being.”
“And certainly the 15% drop in USD/KRW since June has been impressive and matches a similar move seen in 2022.”
“We tend to favour some consolidation both in USD/JPY and USD/KRW for the time being. And the easing of dollar selling pressure in these two big FX pairs can allow the dollar to find support more broadly.”