FX.co ★ Korean Won Strengthens on Trade Deal Signal

The South Korean won appreciated to 1,425 per USD, continuing its recovery from a more than six-month low of 1,440 reached on October 24th. This upturn follows an optimistic outlook for Korean export industries amid signals of a potential new trade agreement with the United States. US President Trump announced the possibility of a new trade deal with South Korea after discussions with President Lee. This agreement may lead to reduced tariffs that have been in effect since July's trade accord, which maintains 25% levies on automotive and semiconductor products despite reducing tariffs on other goods from 25% to 15%. Enhanced export prospects are expected to boost the Korean economy, as indicated by the third-quarter GDP which exceeded expectations, marking a one-year high growth rate of 1.7%. This economic data challenges the assumption that the Bank of Korea might soon resume its rate-cutting cycle after maintaining the interest rate at 2.5% this month, thus reducing the necessity for the easing bias suggested by the dovish guidance from the previous decision.