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Won-Yen story back in focus – BBH

FXStreet (Guatemala) - BBH Global Currency Strategy Team explained that the won-yen story is back after Vice Finance Minister Hwan stated that authorities will manage won moves in line with the yen.

Key Quotes:

“This is neither new nor unexpected, and we place only moderate weight on this ramp up in rhetoric”.

“First, there will be a lag between verbal and actual intervention. Second, even if the BOK starts to take action, it’s unlikely that the won will keep up or match the yen depreciation so far”.

“Third, the yen has much stronger fundamental reasons to weaken than the won (for example, Korea runs a current account surplus of nearly 6% of GDP, compared with a 1% surplus for Japan)”.

“So, this is a factor to watch, but probably more in terms of the won’s performance against other Asian currencies. It does add some uncertainty ahead of the BOK meeting next week (November 13)”.

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