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Korean Won Appreciates on Higher Inflation Report

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Korean won rises as inflation releases at 11-month high

The Korean won continued to appreciate versus the US dollar on November 3, 2015. Inflation results released at the fastest pace in 11 months on recovery fostered by domestic consumption and industrial output. A favorable base effect also played a role in the year-over-year increase of 0.9% in October price levels.

The forecast for the release stood at 0.8%, increasing from September inflation levels of 0.6% on an annual basis. On a monthly basis, inflation levels remained flat against expectations of a decline of 0.2%, similar to the previous month of September.

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Current account surplus exceeds forecasts in September

The current account surplus for September released by the Bank of Korea came in on November 2, 2015, at $10.6 billion compared to $8.5 billion in the previous month of August and $7.5 billion in the same month last year. A significant cut in imports offset the negative growth in exports, causing the surplus to increase.

While exports declined by 10.8% in September on an annual basis, the plunge in imports stood at 23.2% year-over-year. On the other hand, the South Korea Nikkei manufacturing PMI (Purchasing Managers’ Index) decreased slightly in October to 49.1, from 49.2 in September.

Impact on the market

Looking at ETFs for November 3, 2015, the iShares MSCI South Korea Capped ETF (EWY) rose by 1.4%, while the Deutsche X-trackers MSCI South Korea Hedged Equity ETF (DBKO) was also trading slightly positive.

South Korean ADRs (American depositary receipts) were trading on a positive note. KB Financial Group (KB) rose by 2.3%, while LG Display (LPL) rose by 3.5%. Korea Electric Power (KEP) ended on a higher note at 2.3%.

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