EM Alpha: Close short THB vs long KRW

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EM Alpha: Close short THB vs long KRW

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EM Alpha

Close short THB vs long KRW

Higher US rates are a headwind for both KRW and THB 29 June 2026

We entered short THB vs long KRW at 04 May (entry spot 45.26, target 43.5, stop 46.50, GEM FI & FX Strategy

carry: 13bp: see more details in EM Alpha – Thailand/Korea). The trade reached our stop Emerging Markets Global

loss in early June and given BofA's latest Fed and USD forecasts, we no longer have Janice Xue

strong conviction in KRW outperforming THB. Our analysis suggests that both currencies Emerging Asia FI/FX Strategist

are sensitive to rising US treasury yields (See more details in Emerging Insight: Asia FX – Merrill+852 3508Lynch8587(Hong Kong)

The score at half-time). We therefore close the trade at 46.05. janice.xue@bofa.com

Abhay Gupta

Still like the short-THB leg… EmergingMerrill LynchAsia(Singapore)FI/FX Strategist

THB is likely to continue to depreciate as high USD-beta exacerbates low CA seasonality abhay.gupta2@bofa.com

and weak trade flows due to higher non-oil imports. Higher US rates would further push Claudio Piron

rate-differentials against THB while BoT just re-affirmed dovish bias with guidance to EmergingMerrill LynchAsia(Singapore)FI/FX Strategist

maintain the current policy rate (see more details in Asia FX Monthly – Navigating claudio.piron@bofa.com

headwinds from Fed policy shift).

…but we turn more bearish on KRW For a full list of our open trade

recommendations, as well as ourWe have recently revised our USD/KRW year-end forecast upward to 1,560. The main

trade recommendations closed overdriver of KRW weakness in recent months—USD demand stemming from foreign

investors’ equity outflows and hedging of their Korean positions—is likely to persist as the past 12 months, please see