South Korea’s headline consumer price inflation eased to 2.8 percent year-on-year in October, down from 2.9 percent in September, according to MUFG. Core inflation, however, stayed at 2.8 percent, above consensus. MUFG said the gap between the two readings reflects persistent underlying price pressure.
The bank argued that the combination matters for policy. Strong growth and a boom in semiconductor exports, it said, should keep expectations for further tightening by the Bank of Korea alive.
Implications for the won
MUFG said that relatively supportive rate expectations add to the won’s fundamental backing. Korea’s trade surplus is also growing larger, it noted. Foreign equity flows, however, remain a pivotal offset that could limit the currency’s gains.
The note frames the won as caught between domestic rate support and volatile portfolio flows.
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Source: MUFG
