South Korean Won Seizes Foreign Exchange Market Spotlight – Currency Thoughts
South Korean Won Seizes Foreign Exchange Market Spotlight
December 3, 2024
The U.S. dollar jumped 2.4% overnight against the South Korean won after President Yoon Suk Yeol, whose term began in May 2022, declared martial law in the face of an increasingly dysfunctional legislature and the threat of his own impeachment. At today’s low of 1,438 won per dollar, the Korean currency had dropped 9% since the end of the third quarter.
Against other currencies, the dollar has softened slightly, dropping 0.4% against the yen, 0.2% relative to the Swiss franc and 0.1% versus the euro and Australian dollar. There has been little reaction to a mixed bag of news from the Labor Dept JOLTS data that showed higher job openings than anticipated 3.326 million job quits.
China’s government predictably wasted little time before reacting to President Trump’s latest tariff threat, curtailing the export of some rare earth metals. Share prices in Asia closed up 1.9% in Japan and South Korea, 1.3% in Taiwan, 1.0% in Hong Kong, 0.9% in Singapore and 0.4% in China. Stock market gains so far today of about 1% have occurred in Spain and Italy, and the British FTSE is up 0.6%. But the German DAX, Paris CAC and major U.S. stock market indices are essentially flat.
Overnight changes in the 10-year sovereign debt yields of major economies have been limited. A sharper drop in Bitcoin overnight has been mostly reversed already. Gold‘s price is 0.4% higher, and oil (up 1.2%) has made a more significant move in anticipation of the OPEC meeting later this week.
The retreat of Turkish inflation has plateaued at a still-excessive level. Consumer price inflation of 47.1% last month slightly exceeded expectations and was down only two percentage points from the September reading of 49.4% after dropping from 75.5% in May. Producer price inflation has slowed to 29.3% from 57.7% in May and a peak of 157.7% in October 2022.
South African GDP unexpectedly contracted 0.3% last quarter, reversing the second quarter’s increase and leaving GDP just 0.3% above its year-earlier level in the latest quarter and with an average year-on-year gain of 0.4% in January-September.
Brazilian GDP expanded 0.9% in the third quarter and 4.0% from a year earlier. In Hungary, on the other hand, the preliminary estimate of negative 0.7% quarterly economic growth in 3Q has been confirmed as correct. Compared to 3Q 2023, GDP fell by 0.8% in Hungary.
Continuing low inflation was reported in Switzerland and the former Soviet Republic of Georgia. Swiss consumer prices dipped 0.1% in both October and November and posted only a 0.7% 12-month increase during November, down from 3.5% in August 2022. In Georgia, inflation has dropped from 12.9% in January 2022 (just before the Putin war on Ukraine was launched) to a latest reading of 1.3%.
Mexico’s jobless rate of 2.5% in October was down from 2.9% in the previous month and at its lowest pace since 2.3% last March.
Australia experienced a current account deficit for a sixth straight quarter. At A$ 14.1 billion the shortfall last quarter was a tad narrower than in 2Q but considerably wider than the A$ 2.2 billion gap in 3Q 2023.
The U.S. RCM/TIPP optimism index of 54.0 this month revealed the brightest sentiment in 41 months. That’s up from a mid-2024 low of 40.5.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: South African GDP growth, South Korean martial law and the won, Swiss CPI, Turkish CPI and PPI
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