The weakness of the Korean won, which has fallen by over 8% against the US dollar since the start of 2022, is likely to be welcomed by the country’s exporters, who face the prospect of a sharp slowdown in global demand over the coming year. However, a weaker currency is still a concern given the country’s inflation problem, and is another reason why we think the Bank of Korea will tighten monetary policy further over the coming months. Meanwhile, Pakistan looks to be on the cusp of agreeing the terms of a new deal with the IMF. This comes after the government took the key step of raising petrol prices and abolishing fuel subsidies. With foreign exchange reserves running low, a deal is essential to put the economy on a firmer footing.
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