image text translation
Top trades into H1 2025 include (Figure 1 and see section below):
1: Outlook 2025:
Asia FX and rates trades into HI 2025
FX and Rates Trades
Move from
Country
Top Trades
Target
current
Timeline
Conviction (0-5)
(% Or bp)
Long USDICNH
7.60
4.59
End-May
Long USDIKRW
1,500
5.0%
End-May
Long TWDITHB
1.11
4.99
End-February
Short SGDIIDR
11,400
3.89
End-February
Mar-IMM 10y HKD IRS
3.809
43bp
End-Mar
Receive Mar-IMM 2y INR NDOIS
5.69
34bp
End-Jun
KRW Mar-IMM 1s5s Flattener
25bp
19bp
End-Mar
SGD Mar-IMM 2s10s Flattener
25bp
28bp
End-Mar
Note: Conviction scale: 1
Watch; 2 – Watch Closely; 3
Positioned @ 1/3 desired; 4
Positioned
2/3 desired; 5
Positioned
@ 1009 desired.
Source: Bloomberg
Nomura
Fig;
Top
Top
pay
Bank of Korea (BOK) lacks capacity to respond to foreign exchange reserves
2-A. The Bank of Korea’s foreign exchange reserve adequacy ratio is low at an average of 93% based on the IMF model, and drops to 73% based on the fixed exchange rate model.
2-B. Foreign exchange reserves have been continuously decreasing since 2022, and net sales amounted to $9.4 billion (spot and futures) in the first half of 2024 alone.
2-C. In this respect, it is judged that BOK does not have enough power to suppress the weakening of the won.
The value of the won is now just a piece of paper.