KRW likely to depreciate further along with yuan weakness in the near term, says Scotiabank
The Korean won is expected to depreciate further along with falling KOSPI share index and the yuan weakness in the near term, according to the latest research report from Scotiabank.
The 2019 novel coronavirus (2019-nCoV) outbreak has dented risk sentiment across the markets, with more infections and deaths to be reported in the coming future. China's National Health Commission said in a statement that the official count of confirmed cases across mainland China stood at 4,515 as of the end of Monday, including 976 people in critical conditions and 2,714 cases in Hubei province alone.
As of the end of Tuesday, the authorities in Hubei province put the death toll at 125 there, up from 100 the day before. On January 22, the World Health Organization (WHO) postponed making a decision on whether the 2019-nCoV is a global health emergency, with a split emergency committee.
In a situation report dated January 28, the UN health agency said it is continually monitoring developments and the Director-General can reconvene the Emergency Committee on very short notice as needed, the report added.
It will intensify risk aversion if the WHO declares a global health emergency over the 2019-nCoV at the next meeting due within 10 days.
Meanwhile, South Korea’s Finance Minister Hong Nam-ki said in a meeting on Tuesday that the South Korean government will closely monitor possible impact on the economy including exports from the spread of the novel coronavirus and will take steps to stabilize financial markets if needed. The government will execute a KRW20.8 billion budget to prevent the spread of the coronavirus.
"We would sell USD/KRW again should the 2019-nCoV outbreak show signs of stabilization after 7-10 days as Dr Zhong Nanshan expects. Dr Zhong Nanshan, a renowned scientist at China's National Health Commission, told the official Xinhua news agency that the outbreak "will not increase at a large scale" and "I believe it should reach a peak in a week or around 10 days", Scotiabank further noted in the report.