#USDKRW @ 1,322.47 : BoK’s pause will do little to help Won, but weakness will be short-lived – TDS
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The Bank of Korea (BoK) kept its policy rate on hold at 3.50%. Economists at TD Securities believe that the Won weakness will be short-lived as the USD/KRW pair faces stubborn resistance at its 200-Day Moving Average.
“The BoK maintained its policy rate at 3.50% in an unanimous decision. In the accompanying statement, BoK didn’t give any sense it would consider easing soon, seeing a ‘restrictive stance as warranted for considerable time’ and keeping open the option to hike further.”
“We think the BoK will see the 300 bps of hikes in its current cycle as sufficient to slow inflation going forward as the economy weakens, without needing to hike further. We maintain our bigger than consensus expectation of 75 bps easing in Q4 this year, with markets only pricing in a small probability of cuts.”
“Today’s outcome will do little to help KRW, though we continue to believe its weakness will be short-lived as US yields fall back.”
“Strong resistance for USD/KRW is likely around its 200-DMA at 1,323.73.”
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