The South Korean won strengthened initially but gave back some of those gains overnight as broader risk aversion took hold, after the Bank of Korea held its policy rate at 3%, kept its tightening bias intact and described the currency as undervalued.
BoK holds, flags undervaluation
The rate decision was widely expected. The central bank retained its tightening bias even as growth held up and inflation stayed elevated, a stance that gave the won some initial support despite a broader equity selloff. Governor Shin said the won remains undervalued.
OCBC strategists Christopher Wong and Sim Moh Siong said the central bank’s stance, together with Korea’s strong export performance, leaves room for the currency to recover further. They cautioned, however, against assuming the recent gains will simply continue while sentiment toward global technology stocks stays unsettled.
Levels and risks in focus
The strategists pointed to foreign equity selling as a factor to watch, saying a steadier won rally would look more convincing if that selling eased. They named oil prices and global technology sentiment as the main risks to the outlook.
On technical levels, OCBC cited support at 1320 and resistance at 1335, with a further resistance band at 1343 marked by the 21-day moving average.
Source: OCBC
