USD/KRW stalls, KOSPI index rises as South Korea exports, PMI rise

The USD/KRW exchange rate moved sideways after the hawkish Federal Reserve decision and after the strong South Korean export numbers. The pair was trading at 1,331 on Thursday, where it has been in the past few days. It remains 1.43% below its highest point this year.

South Korean exports surged

The USD/KRW pair remained in a tight range on Thursday as traders reflected on the latest Fed decision. In it, the bank decided to maintain status quo by leaving rates unchanged at 5.25% and 5.50%. The Fed also will continue with its quantitative tightening that has seen it drop its total assets from almost $9 trillion during the pandemic to $7.6 trillion today. 

The Fed warned that it will not cut interest rates in March as most analysts were expecting, especially after the strong economic numbers. For example, data published in January showed that the labor market was tight, inflation was still high, consumer confidence was rising, and the GDP expanded by 3.3% in the last quarter.

Meanwhile, the USD/KRW pair reacted mildly to the latest South Korean trade numbers. According to the statistics agency, exports surged by more than 18% in January after rising by 5% in the previous month. This increase was higher than the median estimate of 17.8%. 

Exports jumped because of the ongoing demand for semiconductors and Samsung phones jumped. However, this increase was also caused by the fact that January had more working days this year compared to in 2023. Still, these numbers mean that the economy is recovering modestly well.

South Korea is one of the biggest players in the semiconductor industry. As such, the country is benefiting from the ongoing risks surrounding Taiwan, the biggest chips manufacturer. Samsung has expanded its chips manufacturing in the past few months. South Korea’s imports slipped by 7.8% while the trade surplus came in at $300 million. 

South Korea manufacturing PMI rose

Another report showed that the manufacturing sector is doing well. The manufacturing PMI figure rose from 49 in December to 51.2 in February. A PMI number of 50 and above is a good signal that a sector is growing.

The KOSPI Composite index reacted positively to these reports. It jumped by more than 1.40%, becoming the best-performing major index in Asia. It has jumped by more than 4% from its lowest point in January. But it also remains much lower than the YTD high of KRW 2,680