EM FI/FX Strategy: Asia: Three things to watch in the coming week

Research evidence excerpt

EM FI/FX Strategy: Asia: Three things to watch in the coming week

Global Research

13 July 2026ab

EM FI/FX Strategy Emerging Markets

Asia EmergingAsia: Three things to watch in the coming week

Teck Quan Koh

Strategist

BOK rate decision (16-Jul) teck-quan.koh@ubs.com

+65-6495 4416

The BoK is expected to raise its policy rate by 25bp to 2.75%, a well telegraphed move

supported by several factors. Inflation remains elevated, with sequential core CPI Rohit Arora

Strategistinflation tracking around 3% (6 month annualized), while growth momentum appears

rohit-b.arora@ubs.com

stronger than the BoK’s latest forecast of 2.6% (UBS 2026F: 2.8%). At the same time, +65-6495 5232

concerns around elevated property prices, alongside the year to date equity market rally,

add to the case for further policy tightening. The focus at this meeting, however, will be

on the governor’s forward guidance, particularly as the swaps market currently prices

close to two 25bp hikes through end 2026 and will be seeking support. Given persistent

inflationary pressures - more recently driven by food prices - alongside ongoing financial

stability concerns, we see scope for market pricing of an extended tightening cycle to be

endorsed, and would look to pay Korea short end rates on the opportunity. On FX, the

KRW is likely to take cues from broader dollar dynamics (US CPI inflation release, Chair

Warsh will deliver semi-annual testimony in front of the House Financial Services

Committee, Strait of Hormuz developments) and policy actions by regional peers aimed

at anchoring FX stability in the region. We remain bullish KRW over the medium term,

with valuations screening ~10%cheap (see more here).

China 2QGDP growth and June activity data (15-Jul)

China’s 2Q GDP growth is expected at around 4.5–4.7% y/y.