US Dollar/Korean Won FX Spot Rate

South Korea's Ministry of Data and Statistics reported that the consumer price index, or CPI, a key gauge of inflation, rose 2.9% in September from a year earlier, in line with analyst expectations, after rising 3.1% in August. The report said diesel prices surged 20% and gasoline prices rose 11.8%, with South Korea heavily dependent on energy imports. Prices of agricultural, livestock and fishery products edged down 0.3%, led by declines of 9.2% in napa cabbage and 15.2% in apples. Core CPI, which excludes food and energy prices, rose 2.8% in September from a year earlier, in line with expectations, after rising 3.4% in August. The still-high inflation figures are expected to support the Bank of Korea, or BOK, in pressing ahead with tight monetary policy, after the BOK board raised interest rates at consecutive meetings in July and August, leaving the policy rate at 3%. The BOK forecasts CPI will rise 2.7% in 2026 and 2.3% in 2027, while core CPI is expected to be 2.5% both this year and next year.

Kim Jong-hwa, a board member of the Bank of Korea, said the BOK will weigh both domestic and external factors, including the effects of its two previous rate hikes, before deciding on the timing of any further increases. Kim said South Korea's economy will remain strong while inflation is likely to stay above target for a prolonged period, with price pressures from Middle East conflict and surging exports among key factors to watch. In a statement released alongside the BOK's semi-annual monetary policy report, he said the BOK will closely monitor how the two previous rate hikes affect the economy before considering its next policy move. The BOK report said global investment in artificial intelligence, a driver of South Korea's semiconductor exports, is expected to keep expanding for a long time. Last month the BOK raised its policy rate by 0.25% to 3.00%, its second consecutive increase, as inflation remained above target and financial stability risks persisted.

South Korea is considering issuing a won-pegged stablecoin, which could save merchants up to $3.8 billion a year in payment fees, according to a report by Crypto Editorial. The study highlights the potential of a won stablecoin to reduce transaction costs for retailers, who currently pay fees to major payment providers. The move comes amid regulatory discussions involving the Bank of Korea and the Financial Services Commission, which are considering a regulatory framework for stablecoins and tokenized securities. If implemented, South Korea would become one of the first countries to have a government-backed local currency stablecoin, potentially significantly transforming the domestic payment landscape.

South Korea's National Pension Service (NPS), the country's public pension fund, has stopped its foreign exchange hedging operations, market sources told Reuters on Thursday. The move comes as the won rose to its highest level in about two years. NPS, the world's third-largest public pension fund and a major player in domestic financial markets, had this year raised its hedging limit and flexibly conducted currency hedging to support authorities' efforts to curb the won's weakness. NPS's hedging operations effectively increase the supply of dollars in the domestic foreign exchange market. A source, speaking on condition of anonymity, said, "NPS's currency hedging has been halted. There seems to be dollar buying demand today." Another market source noted that the pension fund's dollar purchases could occur in both regular trading and "market average rate" trading. NPS declined to comment on its foreign exchange policy. The decision comes amid growing concerns about one-way market moves following the won's sharp rebound. Foreign exchange authorities recently bought about $20 billion of dollars sold by semiconductor maker SK Hynix after its U.S. stock listing. In trading on Thursday, the won rose as much as 1.15% against the dollar to 1,334.7 won per dollar, the highest since October 4, 2024, but later pared gains and was trading at 1,346.2 won as of 0321 GMT (12:21 p.m. Japan time). The won has gained 16% against the dollar this quarter, reversing a four-quarter losing streak that had taken it to a 17-year low. NPS's assets under management stood at 1,865.6 trillion won ($1.39 trillion) as of end-June, with overseas assets accounting for 54% of the total.

OCBC strategists Sim Moh Siong and Christopher Wong have recalibrated their Asian FX forecasts slightly firmer against the US dollar, with more notable upgrades for the South Korean won and the Malaysian ringgit. The adjustments reflect a modest improvement in the outlook for these currencies relative to the dollar, though the overall tone remains cautious. The revised forecasts suggest that the won and ringgit are expected to perform better than previously anticipated, while other Asian currencies see only marginal changes. This recalibration comes amid ongoing global market dynamics and shifts in investor sentiment toward the region.

Commerzbank's Charlie Lay reports that the Bank of Korea delivered a second consecutive 25 basis point rate hike to 3.0% and maintained a tightening bias, which is supporting the Korean won after its sharp appreciation since June.

Commerzbank reports that the Bank of Korea has delivered back-to-back 25 basis point hikes, bringing its policy rate to 3.0%, as it front-loads tightening amid rising growth and core inflation forecasts. The bank signals one more hike over the next six months but may pause to assess the effects of its actions. The South Korean won is consolidating as the central bank's aggressive stance supports the currency.

The Korean Won continues to advance, supported by back-to-back Bank of Korea rate hikes to 3.00% and a Dot Plot signaling a further rise to 3.25% in six months, according to ING's Chris Turner. The currency's strength is also underpinned by a booming semiconductor sector, which is boosting export revenues and attracting foreign investment. These factors together are driving sustained appreciation of the KRW against major currencies.

DBS Group strategists Taimur Baig and Nathan Chow expect South Korea's August exports to remain strong near 60% year-on-year, underpinning the outlook for the KOSPI and the Korean Won even as growth moderates from June's peak.

Brown Brothers Harriman's Elias Haddad says the South Korean won is undervalued and backed by the Bank of Korea's monetary tightening, with USD/KRW trading near a one-year low after the BoK delivered a back-to-back 25 basis point hike to 3.00%.

The Bank of Korea (BoK) decided to raise its policy interest rate by 0.25% to 3.00% today (Aug. 27), as the market expected, to curb rising inflation. Core inflation hit a nearly three-year high of 2.6% in July, while headline inflation slowed to 2.8%. The central bank noted that the economy remains stronger than expected, expanding 3.7% in the second quarter, supported by semiconductor exports, and raised its 2026 growth forecast to 3.3% from 2.6%, amid uncertainties over oil prices and exchange rates.

The Bank of Korea (central bank) raised its policy rate by 25 basis points to 3.00% on the 27th, marking the second consecutive rate hike. In a Reuters poll, 18 out of 35 economists had expected a hike to 3.00%. Governor Rhee Chang-yong will hold a press conference at 11:10 a.m. Japan time.

Societe Generale analysts note the Korean Won has strengthened 12% against the US Dollar year-to-date, with USD/KRW falling from around 1560 in June to below 1380. The bank attributes the Won's strength to technology-related capital flows.

Brown Brothers Harriman's Elias Haddad expects the Bank of Thailand to hold rates at 1.00%, leaving negative real yields that keep the Thai Baht lagging. The Bank of Korea is seen hiking again to 3.00%, supporting the South Korean Won as growth and inflation exceed targets.

Senior foreign exchange officials from South Korea and Japan met in Tokyo on Friday and pledged to strengthen cooperation and maintain close contact amid volatility in Asian currency markets. The meeting came after joint currency intervention by the United States and Japan in late July helped support both the yen and the won. South Korea's Ministry of Economy and Finance said Deputy Minister Moon Ji-sung met with Japan's Vice Finance Minister for International Affairs Atsushi Mimura. The two sides exchanged views on the latest global economic and financial market conditions, as well as each country's policy responses. They also discussed issues within multilateral cooperation frameworks, including ASEAN+3 and the G20, and preparations for the 11th South Korea-Japan finance ministers' meeting, which Seoul will host. They agreed to maintain close contact at both working and senior levels. The talks marked the first high-level contact between the two countries since the events of July 31, when Japan and the United States jointly bought yen, just one day after Japanese authorities intervened in the market to support the currency. On that day, Moon said foreign exchange authorities from the United States, South Korea, and Japan were in close coordination, although he did not confirm whether South Korea also intervened. The moves pushed the yen and the won stronger in the same direction in late July. Since then, however, the two currencies have diverged, with the yen giving back some of its post-intervention gains while the won continued to strengthen to an 11-month high. The talks between Seoul and Tokyo therefore took place at a time when the two countries face different currency challenges but still need to coordinate policy closely amid global financial market volatility and movements in the US dollar.

The South Korean won strengthened to 1,380.35 won per dollar, its strongest level in 10 months, after Samsung Electronics announced a shareholder return plan of up to 110 trillion won and SK Hynix announced a share buyback worth 40 trillion won, totaling about 150 trillion won. An economist at Hanwha Investment & Securities said the companies may need to sell dollars to buy won to fund payments to shareholders, which would create buying pressure for the South Korean currency in the market. Citigroup estimates that about half of the program's funds could be converted back into dollars by foreign investors, but the net effect on the won is likely to be positive because chip companies need to convert more export revenue into won.

The South Korean won strengthened further, with USD/KRW dropping to the mid-1380s even as the KOSPI fell nearly 6% on semiconductor-led losses. DBS strategist Chang Wei Liang attributed the won's rally to foreign inflows, noting that the currency's strength has resumed despite the equity market decline.

Societe Generale analysts say the South Korean won is targeting a level of 1407 against the US dollar. They note USD/KRW has corrected after losing its 200-day moving average near 1478 and is now testing an ascending trend line from 2023 around 1407.

A deputy governor of the Bank of Korea said there is a very high chance of additional interest rate hikes to address lingering inflationary pressures, stressing that policy must be preemptive and proactive. While no timing or magnitude of the hike was specified, the signal was clear after last month's meeting, which delivered the first rate increase in three and a half years. The central bank is more concerned about demand-driven inflation than supply-side impacts from Middle East conflicts. The latest data showed the July consumer price index rose 2.8 percent year-on-year, slowing from 3.2 percent in June, while core inflation rose 2.6 percent, the largest increase since December 2023.

Central banks in Asia's emerging markets are adjusting their strategies to cope with weakening currencies, increasingly turning to measures that attract foreign exchange inflows rather than relying solely on selling foreign reserves to intervene in markets. The Thai baht, Indonesian rupiah, and Indian rupee are among the five worst-performing currencies this year out of 22 emerging-market currencies tracked by Bloomberg. India has attracted nearly 40 billion dollars from overseas Indians through high-yield dollar deposit products. South Korea is pushing exporters to repatriate dollar earnings, leading the won to post its strongest monthly gain since 2022. Indonesia has drawn about 1.6 billion dollars in foreign capital into its bond market over the past two months. Meanwhile, foreign reserves of Indonesia, India, the Philippines, and Thailand have fallen by around 4 to 9 percent since the Iran conflict began. Analysts at MUFG Bank expect Indonesia and the Philippines may each raise interest rates twice this year, while South Korea could hike at least once more.

ING economists Deepali Bhargava and Lynn Song highlight a sharp 8% drop in USD/KRW earlier in the second quarter, driven by temporary flows such as Hynix ADR repatriation and National Pension Service hedging adjustments, alongside a hawkish Bank of Korea hike. They note that a stable Federal Reserve and sustained AI-related demand are now providing support for the South Korean won against the US dollar.

The South Korean won strengthened to its highest level in nearly 10 months at 1,414.55 per dollar, as exporters accelerated converting dollar revenues back into won. In particular, SK Hynix is set to bring home 26.5 billion dollars raised from a US share sale for domestic investment. The won has gained more than 9 percent this quarter, making it the best-performing currency in Asia, a sharp turnaround from the first half when it was the region's worst performer with a decline of around 7 percent. An economist at Woori Bank noted that dollar selling by exporters still outweighs dollar buying when the currency strengthens, and expects the won to trade in a range of 1,410 to 1,440 per dollar in the near term.

MUFG says the South Korean won, Thai baht, Singapore dollar, and to a smaller extent the Philippine peso are the main Asian FX beneficiaries if Japanese yen strength persists, given their higher sensitivity to USD/JPY.

The dollar fell against the yen in the New York foreign exchange market, trading in the lower 158 yen range. With the Japanese government and the Bank of Japan believed to have conducted yen-buying intervention the previous day, caution over additional intervention grew, capping the dollar's upside. In late trading, the dollar-yen pair was down 0.8 percent at 158.225 yen. According to people familiar with the matter, the U.S. Treasury Department notified several banks through the Federal Reserve Bank of New York about the possibility of yen intervention on the 31st, keeping market tensions high. The previous day, authorities in Japan and South Korea conducted currency intervention by buying their own currencies. The South Korean won was down about 1 percent against the dollar at 1,439.66 won, after hitting a nine-month high the day before.

Japan and South Korea both stepped in to buy their currencies on Thursday in a rare coordinated intervention that marks an escalation in efforts to stem currency weakness, with signs of U.S. support growing on Friday. Japan conducted its yen-buying intervention in New York hours on Thursday, and Bank of Japan data suggested Japan may have sold as much as $58.97 billion to support the yen. South Korea's foreign exchange authorities were also selling dollars alongside Japan, a separate source said. Reuters reported that the U.S. Treasury had informed a number of banks that it may intervene in the yen market on Friday, and that banks should stand ready for future action. The intervention lifted the yen off recent 40-year lows, though it handed back some gains on Friday after the BOJ held interest rates steady at 1%.

South Korea has disclosed that it is coordinating closely with the United States and Japan after markets speculated that Japan intervened to support the yen, causing the won to strengthen in tandem. Moon Ji-sung, South Korea's Deputy Minister of Economy and Finance, stated that the country is working closely with major economies, especially the US and Japan, and will continue such cooperation. The won strengthened by as much as 1.8 percent to 1,417.10 won per US dollar in late Thursday trading, its strongest level since October 2025, before partially weakening to around 1,435 won per dollar on Friday morning. The strengthening occurred around the same time the yen surged 3.3 percent to 157.98 yen per dollar, after markets speculated that Japan had intervened in the foreign exchange market to prop up its currency. Although the won was the weakest currency in Asia in the first half of the year, its recovery this month has made it the strongest currency in the Asian region.

The South Korean Won extended gains for a second consecutive day against the US Dollar, nearing four-month highs and heading for a 6.5% monthly rally. Strong South Korean macroeconomic data and market expectations of monetary tightening by the Bank of Korea offset a selloff in the KOSPI Index.

Goldman Sachs is bullish on the South Korean won, Taiwan dollar, and Malaysian ringgit, arguing that the artificial intelligence investment boom now shapes Asia's foreign exchange market. The bank ranks those currencies above energy importers such as the Thai baht and Indonesian rupiah, which it expects to keep lagging. Goldman economists forecast South Korea's current account surplus will almost double to roughly 300 billion dollars this year, equal to 13.9% of GDP, while Taiwan's surplus is projected to reach 25% of GDP. The Malaysian ringgit is supported by resilient AI-led growth, strong exports, and sustained foreign direct investment. Market data shows all three AI-linked currencies have lost ground against the dollar index in 2026, with the won down 1.64%, the ringgit down 0.67%, and the Taiwan dollar down 3.05%, yet they have outperformed energy importers like the baht, which fell 5.97%, and the rupiah, which dropped 7.30%.

Societe Generale's technical team notes that USD/KRW failed twice to break above the June high around 1,561, triggering a deeper decline towards the 200-day moving average. The pair is now testing this key moving average, with next support at a multi-month ascending trend line near 1,464/1,461.

South Korea has announced a major roadmap to internationalise the won, according to Commerzbank. The plan includes allowing unlimited won transactions with foreign institutions starting January 2027 and providing broader access to onshore markets.

The South Korean government announced on the 19th a detailed institutional reform that will allow foreigners to freely trade the won among themselves. From January 2027, foreign investors will be able to trade the won without limits through overseas financial institutions pre-registered with the government, eliminating the need to open a won account in South Korea. Won transfers between foreigners will be exempt from prior reporting for most capital transactions, excluding domestic real estate deals, and settlements will be processed through a newly established 24-hour network operated by the Bank of Korea. In addition, the reporting threshold for won loans to foreigners will be more than doubled, and verification procedures at foreign exchange banks will be simplified. This series of reforms marks a major shift in exchange rate policy, which had prioritized capital controls since the 1997 Asian financial crisis, and will ease foreign exchange trading regulations, which had been one of the reasons MSCI did not upgrade South Korea to a developed market.

Brown Brothers Harriman’s Elias Haddad notes the Korean Won is outperforming, supported by a hawkish 25 basis point Bank of Korea hike to 2.75% and expectations that growth and core inflation will exceed 2026 projections.

Asian equity markets traded mixed on Thursday, with South Korea's benchmark KOSPI plunging nearly 7% to around 6,780 after the Bank of Korea delivered a widely anticipated 25-basis-point interest rate hike to 2.75%, initiating a fresh monetary tightening cycle. Japan's Nikkei fell 2.84% to below 67,000 and the broader Topix Index declined 0.8% to 4,055, while China's Shanghai Composite dropped 0.84% to a more than three-month low of 3,912 and the Shenzhen Component slid 1.6% to 14,548, pressured by a broad selloff in technology shares. Hong Kong's Hang Seng rose 2.10% to 24,995, extending its recent upward trajectory, and India's Sensex gained 0.22% to 77,423 at the open, led by a rebound in IT stocks. U.S. equity futures remained largely flat ahead of the opening bell, with Nasdaq 100 futures ticking up 0.03%, while S&P 500 and Dow futures gained 0.09% and 0.08%, respectively. In commodities, crude oil fluctuated around $80 per barrel and safe-haven gold extended its near-term decline, slipping toward the $4,000 per ounce mark.

The Bank of Korea raised its policy rate by 25 basis points to 2.75% on the 16th, implementing its first rate hike in three and a half years. The move aims to stabilize the weakening won and address persistent inflationary pressures. A Reuters poll showed 36 out of 37 economists had expected this rate increase. While the South Korean economy continues to recover on the back of surging semiconductor exports and investment, the won has fallen 3.4% against the dollar, and headline inflation is at its highest in two and a half years. Most analysts expect at least one more rate hike this year, taking the policy rate to 3.00%, with the median economist forecast seeing a further rise to 3.25% in the first quarter of 2027, where it is expected to remain until at least the end of next year.

South Korea’s Ministry of Economy and Finance said on the 14th that major semiconductor and shipbuilding companies have begun selling large amounts of dollars in the futures market, and indicated that conditions in the currency market are improving. In a statement, it noted that against the backdrop of solid fundamentals such as a record trade surplus, structural changes in supply and demand are expected in the foreign exchange market in the second half of the year. The won rose as much as 0.75 percent on the 14th to 1,486.30 per dollar, its strongest since May 12.

Moon Ji-seong, Director General of the International Economic Management Bureau at South Korea's Ministry of Economy and Finance, indicated that the current weakness of the won does not reflect the fundamentals of the domestic economy and cannot be justified. He pointed out that the current level is excessive given robust exports and corporate dollar holdings, and stated that the authorities have ample capacity to stabilize the market. He also expressed the view that the supply-demand balance in the domestic foreign exchange market will improve in the second half of 2026, as dollars held by exporters flow in through currency forwards. Following his remarks, the won strengthened, briefly rising 0.35% to 1,504.2 won per dollar.