Bank of Korea likely to continue with pro-growth stance
Source: FxWire Pro - Commentary / 19 Feb 2019 17:06:17 Europe/London
The Bank of Korea is likely to continue with its pro-growth stance given mounting risks of disinflation/deflation, supportive of local financial markets, noted Scotiabank in a research report. South Korean consumer price inflation decelerated to a 12-month low of 0.8 percent year-on-year in January and is expected to fall into deflationary territory on the base effect in the coming months.
“We also expect South Korea to benefit from China’s future economic rebound”, said Scotiabank.
Chinese outstanding total social financing and M2 money supply rose at a more rapid rate in January 2019, indicating an economic rebound will likely gain momentum in late second quarter of three quarter this year especially if China’s medium-and long-term loans keep rising steadily. Moreover, rebounding geopolitical situation on the Peninsula might strengthen the Korean won as well.
“We maintain our short USD/KRW position targeting 1,100”, added Scotiabank.© FxWire Pro 2019. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.