A bad year for South Korean won may be about to get worse

SINGAPORE • South Korea’s won has been the worst-performing Asian currency this year. Data this week may add to its woes.

Industrial production and consumer confidence numbers will be in focus as traders seek to gauge whether the recent weakness in exports and inflation is spreading. Signs of slower growth may fuel bets the Bank of Korea (BoK) will follow the US Federal Reserve (Fed) in turning more dovish, quickening the won’s decline.

“The data has run a lot weaker than I had bargained on,” said Rob Carnell, Asia-Pacific head of research and chief economist at ING Bank NV in Singapore. ‘‘If anything, the Fed’s decision makes it more likely the
BoK cuts.”

Most emerging Asian currencies have strengthened this year as US-China trade tensions have eased and the Fed has stopped raising interest rates. The won has been the odd one out, falling 1.3%.

Industrial production slowed to a four-month low of 0.1% in January, and if February’s data due last Friday confirm that trend, the won’s losses may escalate. Consumer confidence numbers for March are due on Wednesday, and a manufacturing sentiment survey on Thursday.

Traders have been building bets the BoK is poised to cut interest rates for the first time in three years, even though governor Lee Ju-yeol (picture) has sought to damp that speculation. Three-year bond yields are approaching the central bank’s benchmark of 1.75%, while the market implied policy rate for one year’s time has dropped to 1.64% from as high as 2.1% in May.

If this week’s data reinforce the slowing trend, the dollar-won currency pair may rise above the range of 1,104.95 to 1,144.75 it’s been stuck in since the end of June. Technicals suggest that if it breaches the upper end of that band, it may test the July 2017 high of 1,157.90. The pair closed last Friday at 1,130.20.

Below are key Asian economic data and events due:

Today: Japan all industry activity index, Bank of Japan’s (BoJ) Yutaka Harada speaks; Tomorrow: Singapore Consumer Price Index (CPI); March 27: Reserve Bank of Australia’s (RBA) Luci Ellis speaks; New Zealand (NZ) trade balance; Japan Producer Price Index and BoJ’s summary of opinions, Singapore industrial production; March 28: Reserve Bank of NZ’s rate decision, RBA’s Christopher Kent in Sydney panel, China industrial profits, South Korea consumer confidence; March 29: Australia job vacancies, NZ business confidence, South Korea business survey manufacturing; NZ building permits, Japan jobless rate, industrial production, retail sales and Tokyo CPI, China fourth- quarter  balance of payments (BoP) of current-account balance, South Korea industrial production, Philippines budget balance, Thailand BoP of
current-account balance — Bloomberg