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Forex Flash: Missile test imminent in North Korea? – Deutsche Bank

FXstreet.com (Barcelona) - Tensions on the Korean peninsula took another turn for the worse yesterday after the North announced the indefinite suspension of the joint industrial Gaesong complex along the border. The industrial park, located about an hours drive away from Seoul, is seen as a symbol of North-South Korean co-operation and is also an important source of foreign currency income for the North. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “South Korea provides USD $90m in annual wages paid directly to Pyongyang through laborers employed within the industrial zone.” North Koreans employed in the complex reportedly did not turn up for work this morning.

The South Korean government said the North might be ready to conduct a nuclear test or missile launch as early as this week. The escalating confrontation between both sides is also raising alerts elsewhere. In his prepared remarks overnight, the Head of US Pacific Command said that the North Korea's poses a direct threat" to the US and its allies and the hostile rhetoric from Kim Jong Un "creates an environment marked by the potential for miscalculation and military escalation". North Korea clearly remains the wild card here and the 10th and 15th of April remain key dates to watch as we mentioned yesterday.

They have said that they cannot guarantee the diplomatic missions in Pyongyang from the 10th onwards and the late Kim Il-Sung's birthday (North Korea's founder and grandfather of the current leader) is on the 15th.

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