USD/KRW: Upward trend amid geopolitical tensions and policy divergence – Credit Suisse

Analysts at Credit Suisse expect continued upward momentum in USD/KRW as US yields rise, and think that the pair will trade higher in a 1,190-1,230 range.

Scope for further BoK tightening in 2022

“It is difficult to predict when uncertainty about Ukraine is finally resolved, but once the market re-focuses on Fed tightening, we think there will be continued upward momentum in USD/KRW as US yields rise, and that the pair will trade higher in a 1,190-1,230 range.” 

“For the upcoming 24 February Bank of Kora (BoK) meeting our base case is no change to its policy rate, though there is some risk of another 25 bps hike. There is certainly scope for further tightening in 2022. “

“We think the next BoK tightening move will occur at the 14 April meeting. In the meantime a likely 50 bps Fed hike in March, along with lingering uncertainty about Ukraine, will likely push KRW and other high beta EM currencies weaker against the dollar.”