KRW/JPY likely to weaken further amid escalating external uncertainties, says Scotiabank

The South Korean won is expected to weaken further versus the Japanese yen amid escalating external uncertainties including the U.S.-China trade tensions and Turkish political turmoil, according to the latest research report from Scotiabank.

The KRW will continue running an increasingly tight correlation with the CNH, while remaining susceptible to the Fed’s monetary policy stance, ongoing US-China trade war and geopolitical situation on the Korean Peninsula.

Additionally, the Bank of Korea (BoK) is expected to policy rate on August 31 to protect the nation’s financial stability as some members of the central bank have stressed the need to adjust accommodation according to the minutes of the July 12 policy meeting.

"In the medium term, we believe it would boost risk appetite should US-China trade tensions ease, particularly if taking account of China’s pro-growth policies that could lead to a rebound in the nation’s official manufacturing PMI and 10-year sovereign bond yield," the report commented.