Won pares early losses as Korean stocks extend rebound

At 12:11 KST on Nov. 11, the KOSPI was up 1.62% at 5,324.14, while the KOSDAQ had gained 4.61% to 698.38, according to timestamped Naver Pay Securities records in the factsheet. Edaily attributed the morning rebound to bargain buying in growth stocks.

Earlier in Seoul’s onshore currency market, USD/KRW traded at 1,338.3 at 10:31 KST, still 0.8 won above the Nov. 10 daytime close of 1,337.5. It had opened at 1,343.5 and reached 1,337.1 around 10:00 KST. Edaily cited possible exporter dollar selling and improved equity sentiment as factors behind its retreat from the opening level.

Around 12:11 KST, Samsung Electronics was up 2.44% at 203,750 won and SK hynix had gained 3.84% to 1,258,500 won, according to Naver Pay Securities. These stock quotes and the index readings were intraday prices; the currency quote was from earlier in the morning.

Why did the won open weaker?

The seasonally adjusted US CPI rose 0.4% in October from September, while the index excluding food and energy increased 0.3%. Edaily reported market forecasts of 0.3% and 0.2%, respectively. The release came at 22:30 KST on Nov. 10, after Seoul’s 15:30 daytime close.

Before the release, Federal Reserve Governor Christopher Waller said he favored a 25-basis-point increase in December if inflation improved. A monthly core CPI reading of around 0.3% or higher, he said, could warrant considering a 50-basis-point increase. His remarks were conditional, rather than a response to the October figures.

The one-month non-deliverable forward was last quoted overnight at 1,342.1, according to Edaily’s premarket briefing. Adjusting for swap points of minus 0.90 won implied a spot rate of 1,343.0, or 5.5 won above the previous 15:30 close.

How did stocks compare with the previous session?

Both indices were extending the previous session’s gains. On Nov. 10, the KOSPI closed 4.39% higher at 5,239.13 and the KOSDAQ gained 4.48% to 667.61.

What happened to Korean bond yields?

Korean government bond yields rose in morning trading. The three-year yield increased 8.3 basis points to 3.710%, and the 10-year yield climbed 6.6 basis points to 3.916%, according to Edaily.

The Fed’s 3.75%–4.00% target range has an upper bound 1 percentage point above the Bank of Korea’s 3.00% Base Rate. The upper-bound gap would widen to 1.5 percentage points if the Fed raised its target range by 50 basis points and the BOK kept its Base Rate at 3.00%.

All seven BOK board members voted to hold the Base Rate at 3.00% on Oct. 22. The bank’s next policy-setting meeting is scheduled for Nov. 26.