A friend from business school - ex-BOK (now still in govt) - just asked my views on the KRW.
Short reply: I have stable-bullish MT bias on KRW. Once we get next week’s BOK MPC out of the way there may be some tactical short opportunity if USD-KRW overshoots and USD rebounds on tax cuts. Gone are the days of selling near 1110, buying at 1150. Korean fundamentals are good and the rally - largely due to reduced geopolitical/DPRK risk premium - is valid.
For any tactical short, sequencing is important (BOK on Thu, 30 Nov while US Senate plans a floor vote 'sometime' in the week). Expect BOK jaw-boning to resume post-MPC especially if they weren't able to communicate a dovish - USD-KRW friendly - hike. Better to initiate the trade if US tax cut prospects begin the week poor and end on a high note.
Meanwhile, equity inflows are likely to continue, capping KRW weakness: Foreign equity inflows (green) vs in bonds (gray), KRW (black)
