Following relatively positive economic releases, the South Korean won advanced against the US dollar.  Previously trading at 1073.69, the USDKRW exchange rate fell to trade at 1072.45 in Asian trading.

South Korean industrial production slowed in July, expanding at a 3.8% annualized pace, according to Statistics Korea on August 31st.  This is comparably slower than the robust 6.5% year on year rise seen in June and visibly lower than the 6.2% market estimate.  Although still positive, the figure is evidence that global growth is stalling, not good for the South Korean export sector. The sector has benefited from global demand over the past year – helping the country to weather the global slowdown compared to Western competitors.

But, the report also supports recent comments expressed by Finance Minister Bahk Jae Wan.

Earlier in the week, Minister Bahk , speaking ahead of a policy meeting, noted that growth forecasts for the peninsula economy will likely be cut as “downside risks” had emerged in recent months.

The downgrades are still likely to be considered in light of  positive consumer retail strength.

Consumer sales growth remained positive in the month, rising by 2.3%.  The released figure is far better than the 1.5% consensus estimate and builds on the 1.4% climb in June.  For the year, retail sales are now higher by 5%.

Strong sales volume will continue to support rising inflation in the country – which is already higher by 4.7% annually.  In turn, rising prices will continue to support higher interest rates in the South Korean economy as central bankers look to normalize interest rates in the short term.

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