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KRW: BOK stays on hold; Fed factor will keep KRW under pressure

BOK stays on hold; Fed factor will keep KRW under pressure The BOK kept policy rates steady today in line with market expectations; despite acknowledging the proximity to the lower bound, Governor Lee signalled that there is still room for further easing (though concerns over rising household debt do linger in the background). Our economists are looking for a 25bp policy rate cut to 1.00% in 4Q16, which is a quarter ahead of the consensus. The BOK’s easing bias should keep KTB yields and the won under pressure in the nearterm. USD/KRW traded above the 1130 level for the first time since late July and we expect anchored Fed rate hike expectations to nudge the pair towards 1150.