In June, the Korean won declined by 1.4 percent against the US dollar, despite the greenback’s 2.9 percent rise (DXY Index). Looking ahead, MUFG economists predict the USD/KRW pair to face some pressure as the strength and sustainability of South Korea’s economic recovery improves as vaccinations increase.
“As vaccinations gain traction, we envision a brighter future for South Korea’s economy. As of June 29, the number of shots delivered per 100 people has reached 37, and the government expects herd immunity to be achieved by November.”
“The government’s decision to loosen social distancing laws from July 1st is likely to strengthen the services industry in the short run. From July 1st, dining-in hours will be increased and social gathering restrictions will be loosened.”
“The KRW will gain from the strengthening overall outlook and anticipation of a rate hike by BOK; some market participants now predict a rate hike by BOK as soon as October.”
“We’d also want to point you that the danger of COVID-19 new daily instances remains significant, with no signs of a trend drop and uncertainty; in fact, 794 new cases were reported on June 30.”/n
