May 27th, 2008

KRW: BoK sold 800mio USD from 1050 to 0147, then another 500mio from 1045 to 1036, shift in MoFE tone as now concerned about inflation over growth
CNY: 1yr NDF up 500pip from 6.48 to 6.53

Vietnam
- ref rate moved from 1,044 on 23May to 16,051 on 26May to 16,060 on 27May (trading to 16,212..can trade 1% on either side)
- USD demand increasing from Vietnam's highest inflation since '92
- CPI jumped to 25.2% in May yoy (21.4% in April)
- Food costs have been primary culprit with int'l prices of rice up 67.8% in May yoy, and 22.2% mom
- PM Dung said State Bank will continue fighting inflation

South Africa
- grew at slowest pace in 6 years with annualized 2.1% in Q1, down from 5.3% (mktexp of 2.6%)
- consumer side will remain under pressure with rate hikes while power problems will also feed a cylical downturn
- big impact in mining came from cuts in electricity while production at diamond and platinum mines lower from flooding
- higher electricity, higher rates, and US recession hurting chances of govt goal to cut unemployment to 14% from 23% by 2010
- growth probably down to 2.9% in '08, from 5.1% in '07 (lower than govt forecast of 4%)
- CPI tomorrow expected at 10.0% from 10.1% in March, debate now on 12Jun whether they raise 50bp or 100bp
- analysts expect CPI to average 7.8% this year, up from 5.9% forecast for '08