Bank of Korea Holds Base Rate for Fifth Consecutive Time... Reflecting Won and Housing Price Concerns | DB Securities Team Lead Moon Hong-cheol

Summary

Moon Hong-cheol of DB Securities discusses the Bank of Korea's fifth consecutive rate hold and why FX and housing concerns are constraining policy. He argues the US dollar is likely to weaken as US growth and data quality deteriorate, while the Korean won may lag because it trades with export competitor currencies such as the Taiwan dollar and yen. He also sees Korea's economy becoming more K-shaped, with semiconductors strong but domestic demand strained.

• Bank of Korea held its base rate for a fifth straight meeting, with FX and housing instability limiting cuts.
• Moon argues US growth, employment, and inflation are slowing enough to force more Fed cuts than the market expects.
• He expects a weaker US dollar this year due to relative growth momentum turning against the US.
• He warns US GDP and employment data may overstate economic strength because of sampling bias and revisions.
• The Korean won may not strengthen even if the dollar weakens, as it follows the Taiwan dollar and yen.
• Taiwan's central bank manages its currency against a basket that likely includes the Korean won.
• He sees Korea's economy becoming K-shaped: semiconductors strong while domestic demand struggles under tight rates.