Halister News

(Bloomberg) -- Bank of Korea may signal willingness to tolerate a weaker won to help stimulate growth if it keeps its benchmark interest rate unchanged tomorrow, Bloomberg strategist David Finnerty writes.

• Economic data has weakened since central bank’s meeting in Jan., when it cut its growth and inflation outlook
  • Jan. CPI dropped to 0.0% from 0.3% in Dec.
  • Exports fell 18.5% y/y in Jan. following 14.1% decline in Dec.
  • Manufacturing PMI fell to 49.5 from 50.7 in Dec.
  • Consumer confidence declined to 100 from revised 102
• Rising household debt is a reason why BOK is reluctant to cut rates
• Former board member Kang Myung Hun recently said benchmark interest rate should be lowered as soon as this month to tackle sluggish growth and show that policy makers are doing everything they can to bolster the economy
• BOK is expected to leave its 7-day repo rate at 1.50% according to all 15 economists in Bloomberg survey; decision due tomorrow
• NOTE: David Finnerty is an FX strategist who writes for Bloomberg. The observations he makes are his own and not intended as investment advice.