FX.co ★ Won Slips on Swap Uncertainty and Soft Economic Data

On Tuesday, the South Korean won depreciated to approximately 1,403 against the US dollar, undoing the improvements seen in the prior session. This shift was attributed to the ongoing uncertainties about a possible bilateral currency swap with the United States and the influence of weaker domestic economic indicators. National Security Adviser Wi Sung-lac remarked that the potential for sealing such an arrangement with Washington appears slim. He noted, “Our government has proposed a currency swap, but historically, the US has made it difficult to achieve.” Compounding the situation, recent economic data revealed a decline in domestic demand. Retail sales dropped by 2.4% in August, marking the sharpest decline in 18 months and the first downturn in four months, following a 2.7% rise in July. Concurrently, industrial production remained unchanged compared to the previous month, after rising in both June and July, indicating a possible deceleration in manufacturing activity.