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Bank of Korea delivers back-to-back 25bp hikes to 3.0%
Commerzbank expects KRW gains versus the US dollar to turn more gradual after a roughly 12% rally, with another hike possible over the next six months.
Commerzbank’s Charlie Lay says the Bank of Korea has tightened policy with back-to-back 25 basis point hikes, bringing its rate to 3.0%, as it lifted forecasts for growth and core inflation.
The central bank is signaling one more hike over the next six months, though it may pause later to assess the impact of its recent moves, Lay added.
Even with South Korea’s strong underlying position, including a large current account surplus, Commerzbank expects further KRW appreciation versus the US dollar to proceed more gradually after the currency’s about 12% rally.