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27 Mar 2013
Forex Flash: Korean Won underperforms as Kospi outperforms - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that the Korean Won is underperforming once again, but the Kospi outperformed overnight.
They feel that contrary to much of media characterization, the move higher in USD/KRW has more to do with yen than with the flashy headlines relating to North Korea. The “rogue state,” as it was once known, put its artillery forces on their highest combat level alert yesterday and reiterated threats to attack the US and South Korea. They write, “We still think that this amounts more to internal showmanship than anything else, especially now that China is no longer as supportive. In our view, KRW should still be treated as a low-beta proxy of the JPY for the time being. On the margin, firming expectations for further easing by the BoK may also be weighing on the won. Consumer sentiment released overnight rose back to May 2012 levels, helping the Kospi rise for the third consecutive session.”
They feel that contrary to much of media characterization, the move higher in USD/KRW has more to do with yen than with the flashy headlines relating to North Korea. The “rogue state,” as it was once known, put its artillery forces on their highest combat level alert yesterday and reiterated threats to attack the US and South Korea. They write, “We still think that this amounts more to internal showmanship than anything else, especially now that China is no longer as supportive. In our view, KRW should still be treated as a low-beta proxy of the JPY for the time being. On the margin, firming expectations for further easing by the BoK may also be weighing on the won. Consumer sentiment released overnight rose back to May 2012 levels, helping the Kospi rise for the third consecutive session.”