BoK likely to maintain policy rate at 1.50 pct on hopes of ease in CPI inflation during August-October, says Scotiabank

The Bank of Korea (BoK) is expected to maintain its policy rate at 1.50 percent at its monetary policy meeting on Thursday as the nation’s CPI inflation will likely ease further particularly in the period of August to October. In addition, the US-China trade war could cast a shadow on future global demand, which would be a drag on the export-driven economy’s growth, according to the latest research report from Scotiabank.

Off late, the Office of the USTR said in a statement that "As a result of China’s retaliation and failure to change its practices, the President has ordered USTR to begin the process of imposing tariffs of 10 percent on an additional USD200 billion of Chinese imports."

Although the USTR also said that the United States is willing to negotiate with China, the release of the list will dampen risk sentiment and undermine EM Asian currencies. It is supportive of our short CNH/JPY cross position.

"We expect USD/KRW to range trade between 1,100 and 1,140 with upward risks in the near future, while maintaining our long EUR/KRW cross position targeting 1,360," the report added.