The Bank of Korea kept the policy rate unchanged but flagged increased downside risks to growth. We think the focus is likely to shift to short-term stimulus.

We had consistently been advocating USDKRW via NDFs and option spreads, please be noted that the spot FX is now trading at 1207 levels, where target set was at 1200 levels.  Refer below weblink for more readings on our previous write up:

http://www.econotimes.com/FxWirePro-Why-and-how-KRW-weaker-Take-a-look-on-tackling-downside-risks-443525

For now, swotting long shapes for USDKRW stop:

We still maintain the same position but now increase the stop in our existing longs in USDKRW (initiated on Dec 9th) to 1183 to lock in 0.80% of PnL. The trade is up by 2.30% including small negative carry. We continue to believe USDKRW would head towards Q1 target of 1240.

Simultaneously, we had also initiated longs in INRKRW trade in the previous times, and it is currently up by 6.55% including positive carry.  Refer these threads in EMFX section by following below weblinks:

http://www.econotimes.com/FxWirePro-RBI-designs-new-MPC-to-ensure-policy-actions-on-track-to-keep-inflation-targets-%E2%80%93-INR-trading-baskets-315779

http://www.econotimes.com/FxWirePro-How-to-position-EMFX-trade-basket-ahead-of-US-elections-383089

Road ahead for 2017, we're revising long INRKRW stop: At spot reference of 17.74, the earlier trade has been altered for the higher stop at 17.35 (-2.19%), to lock-in 4.20% profit including positive carry. We keep target unchanged at 18.18 (which is still 2.48% higher). Thereby, the trade likely to fetch attractive risk reward ratio as the cross is likely to perform better if EM FX sentiment worsens, during which the RBI will likely do FX intervention to keep volatility low while the low-yielder KRW might depreciate more.