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Forex Flash: KRW priced negative as BoK downgrades growth outlook – Westpac

FXstreet.com (Barcelona) - According to Strategist Jonathan Cavenagh at Westpac, “Looking at the fundamentals from a Korean perspective, we feel that a lot of bad news is priced into the KRW outlook.” The growth outlook has been downgraded by both the Government and the BoK.

Moreover, there are concerns around yen weakness and what impact it will have on the Korean export sector and then more recently, we have seen tensions with North Korea rise significantly. “On this front we think USD/KRW is priced to some extent for some type of action from North Korea (i.e. a missile launch). Of course such an outcome could still drive a spike higher in USD/KRW. This is why we have orders to sell more SGD/KRW at higher levels.” he adds.

Significant action on the part of North Korea is still a risk and would drive a significant move higher in USD/KRW and this would see us exit our short SGD/KRW position. However, this week has not seen a further escalation in tensions.

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