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Won’s Biggest Rally Since June Is Winding Down

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The won’s biggest gain month on month since June is prompting some analysts to alert the rally can be overdone.

Standard Chartered (OTC:SCBFF) Bank Korea Ltd. and Woori Bank estimate that the won might be near its peak after leaping 3% up against the buck in to lead performance in Asia october. The surge prompted policymakers to issue a warning that is verbal week, even as technicals suggest the currency is overbought.

“The economy isn’t all that positive,” Park Chong Hoon, an economist at StanChart in Seoul said, adding that the wide trade surplus which has supported the money is not likely to persist. “Foreign investors are continuing to offer assets which are local while South Koreans continue steadily to invest aboard in search for better yields.”

The won has rallied for five straight months bolstered with a surprise jump in financial growth as well as the increase that is fastest in exports in years. The phone calls for caution come against wider opinion that is bullish others like UBS Group AG (SIX:UBSG) and RBC Capital Markets, which had argued that the Joe Biden triumph into the Nov. 3 U.S. election would help trade-dependent currencies.

Woori Bank’s Min Gyeong-won disagrees. He sees the won declining year that is next expectations that U.S. trade protectionism will continue no matter who wins the elections.

“Whoever becomes the president, U.S.-China trade tensions are going to increase,” said Min. “Markets will be looking at Biden as though he could be a savior to your globe, but in fact his trade stance is not that much not the same as Trump’s protectionism policies.”

Overbought

Technical analysis show the won could be primed for the pull-back. Sluggish stochastics, a energy indicator, is signaling so it might struggle to advance past 1,120 against the buck into the near-term.

It shut at 1,135.15 on, with StanChart forecasting it to damage to 1,220 by year-end Friday. The won’s biggest gain month on month since June is prompting interesting analysis.

The won’s gains brought a caution week that is last the nation’s Vice Finance Minister Kim Yong-beom, who stated the us government will require measures to stabilize foreign currency markets if needed. The currency’s advance in October far outpaced other Asian tech exporters, using the yuan that is offshore rising 1.3% whilst the Taiwan buck gained 0.9%.

“Dollar-won’s fall will be capped around 1,130 as that degree appears to attract warnings which are verbal authorities,” said Min.

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