LONDON: Traders who are becoming more positive about the outlook for Asia’s export-led economies could see value in buying South Korean won and selling Japanese yen.

The South Korean authorities’ exchange-rate policy should favor such a trade. They already admit the won is modestly undervalued, according to Hoe Ee Khor, assistant director of the International Monetary Fund’s Asia and Pacific Department.

And Seoul seems to have no intention of weakening the won further with Finance Minister Bahk Jae-wan telling Reuters recently that such a move would do more harm than good.

Given the South Korean authorities’ stance on exchange rates, the won should strengthen as the country’s economic prospects improve.

South Korea’s exports may not be buoyant but their 1.8 percent drop in September from a year earlier was markedly better than the 5.3 percent decline which had been expected by economists polled by Reuters.

There is also the possibility that a territorial row between China and Japan that has hit sales of Japanese cars in China could boost Chinese purchases of Korean products.

South Korean automaker Hyundai Motor said on Friday its sales in China rose 15 percent in September from a year earlier because anti-Japan protests in the world’s top market dented sales by Japanese rivals. That could help the won gain ground against the yen.

Moreover, there are signs that some Asian economies are stirring. If such economic activity picks up, South Korea should benefit.

For example, Taiwanese exports rose more than expected in September. And economists polled by Reuters expect data on Saturday to show Chinese exports rebounded in September.

That said, South Korea’s economy is hardly in rude health and the central bank is expected to cut interest rates on Thursday by a quarter of a percentage point to 2.75 percent.

But that may be no obstacle to the won rising against the yen given Japan’s policymakers’ opposition to any further strengthening of the yen.

That leaves scope for the yen to slide from its current levels, of around 14.21 won, toward its March low of 13.3932.

— Neal Kimberley is an FX market analyst for Reuters. The opinions expressed are his own.