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Bank of America sees Asian inflationThe Bank of America Merrill Lynch sees no currency wars in Asia but more Asian inflation.
In South Korea, for example, the won gives Korea some wiggle room. Although it has strengthened this year - especially in the past few months - regional currencies of other exporters - notably the Japanese yen - have risen much further. And in the last month the won has actually dropped 1.6 percent against the dollar, which perhaps gave the BoK the breathing space needed for the hike. Sharmila Whelan at Bank of America Merrill Lynch is expecting more rises:
“We expect year on year headline inflation to start easing at the turn of the year due to base effects. Even so with domestic demand robust inflation risks are on the rise. The Bank of Korea has shown the appetite to act. Currently we are forecasting no further hike for the rest of this year and three 25bp increases next year. The prospect of more increases next year, are rising, in our view.”
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