The South Korean won appreciated to 1,425 per USD, extending the rebound from the over six-month low of 1,440 touched on October 24th amid the stronger outlook for Korean export industries under signals of new trade deal with the US. US President Trump announced a likely new trade deal with Korea after meeting with President Lee. Such a deal may lower tariffs that stayed in place since July’s trade deal, which maintained 25% levies on autos and chips despite softening rates on other goods from 25% to 15%. Improved export prospects would add to traction on the Korean economy after the third quarter GDP was sharply above expectations, reflecting a one-year high growth rate of 1.7%. The data pressed against bets that the Bank of Korea would imminently restart its cutting cycle after its hold at 2.5% this month, limiting the need for the easing bias reflected in the dovish guidance from last decision.
