USD/KRW

Likely passed the peak of the year but volatile path awaits

Current spot: 1286.96

• The KRW touched 1,289 in mid-May, the highest since the pandemic, yet, rapidly unwound its earlier weakness as the market expected FX-related policy changes to be favourable to the KRW and foreign investors returned to the KOSPI.
• • The Bank of Korea is expected to hike policy rates until the end of this year. There has been ongoing discussion on a swap-like USKorea FX agreement, while the government is planning to present an fx market improvement plan soon. This could lead to the KOSPI being included in the MSCI World Index in a few years’ time.
• • We expect the KRW to appreciate further, albeit at a slower pace Source: Refinitiv, ING forecasts than the recent rapid movement.

USD/PHP

PHP weakens on widening trade deficit

Current spot: 53.30

• The PHP depreciated after several sessions of selling by foreign investors in the local equity market. The currency was also under pressure as the trade balance stayed in deep deficit due to surging imports.
• • Bangko Sentral ng Pilipinas (BSP) finally joined the rate hike club, increasing policy rates by 25bp in May. But the PHP barely reacted as the move was priced in by market participants.
• • The PHP faces further weakening pressure as the trade balance remains in deep deficit as imports rise. BSP has hinted at additional rate hikes, but the PHP may require more aggressive hiking to find support.

USD/SGD

SGD weakens on dimming global outlook

Current spot: 1.3892

• • The SGD tracked regional peers and weakened in May as investor sentiment wavered on concerns about global growth. But the SGD steadied at the end of May after China announced a gradual re-opening after extended lockdowns, lifting market sentiment.
• • Core inflation continues to accelerate suggesting that the Monetary Authority of Singapore will remain on the alert to take further action. The MAS can consider additional action in October, or at unscheduled meetings before then should core inflation move close to 4%.
• • The SGD should steady in the near term if global growth Source: Refinitiv, ING forecasts prospects improve after China’s economy gradually reopens.

USD/TWD

Capital flows vs central bank hike

Current spot: 29.76

• • The SGD tracked regional peers and weakened in May as investor sentiment wavered on concerns about global growth. But the SGD steadied at the end of May after China announced a gradual re-opening after extended lockdowns, lifting market sentiment.
• • Core inflation continues to accelerate suggesting that the Monetary Authority of Singapore will remain on the alert to take further action. The MAS can consider additional action in October, or at unscheduled meetings before then should core inflation move close to 4%.
• • The SGD should steady in the near term if global growth Source: Refinitiv, ING forecasts prospects improve after China’s economy gradually reopens.

This article is a part of a report by ING Economics

Disclaimer

This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more