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Investing.com -- Citi analysts provided insights into South Korea’s economic and political landscape during a macro trip in Seoul on March 10-11.
They discussed the likelihood of President Yoon Suk Yeol’s impeachment, potential delays in the verdict, and the implications for the country’s economic stability and monetary policy.
The analysts observed a divided perspective on the left-wing opposition Democratic Party’s strategies as the next presidential election approaches in May 2025.
Citi noted that a supplementary budget ahead of the election is becoming increasingly unlikely due to the extended political deadlock. However, they did not rule out the possibility of a larger supplementary budget post-election.
Concerning economic growth, Citi highlighted that South Korea faces challenges both domestically and externally. The Bank of Korea (BoK) is expected to prioritize economic growth stability, and while it may consider rate cuts, the approach will likely remain cautious.
From a foreign exchange and rates strategy standpoint, Citi suggested that the BoK might want to conserve policy space, indicating a reluctance to initiate a cycle of rate cuts hastily. The USD/KRW is predicted to remain rangebound, fluctuating between 1430 and 1470.
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