South Korean won slides as markets anticipate Fed rate hike
The South Korean won weakened against the U.S. dollar on Monday while investors priced in a likely Federal Reserve rate increase.
The South Korean currency declined against the U.S. dollar on Monday as market participants grew more confident that the Federal Reserve will hike its benchmark rate in the coming days. Brent crude futures stayed above the US$100 mark, reflecting heightened tensions in the Middle East following the U.S.-Iran conflict, which added inflationary pressure. Investors also monitored the Bank of Japan's policy meeting later in the week. During the session, foreign holders offloaded a net amount of won worth roughly US$2.3 billion in Korean stocks, pushing the Korea Composite Stock Price Index down more than three percent to close at 6,684.37.
Why it matters
The won's drop signals market sensitivity to U.S. monetary policy and oil price shocks, affecting Korean investors and the broader economy.
How this story developed
- Aug 19 Fed officials warn higher rates may be needed if inflation stays elevated
- Sep 7 Iran claimed to have hit an unmanned U.S. vessel in the Strait of Hormuz, which the U.S. dismissed as false.
- Sep 8 Iran announced it will double the price of fuel consumed beyond its quota.
- Sep 8 Iran’s Fars news agency reported an explosion heard in the southern Jask area off the Gulf of Oman and east of the Strait of Hormuz.
- Sep 9 The buyback size was increased from $4 billion to $6 billion.
- Sep 10 Oil prices have risen above $95 a barrel amid renewed Middle‑East tensions.
- Sep 10 New reporting highlights a sharp inflation jump and rising fuel costs, reinforcing expectations of a deposit‑rate increase.
- Sep 10 The ECB implemented a 0.25‑point rate increase across its three principal rates.
- Sep 11 Asian stock markets fell on Friday, mirroring Wall Street losses, while Brent crude rose above $108 a barrel as geopolitical strains between the United States and Iran intensified.
- Sep 11 Fed minutes revealed a 9‑3 vote to keep rates near 3.6% and a drop in market odds for a September hike to about 67%.
- Sep 11 August US CPI held steady at 3.4% year‑over‑year and core CPI fell to 2.4%.
- Sep 12 Oil prices rose to just below $109 a barrel as Middle‑East tensions escalated.
- Sep 12 Rough’s production licence is set to expire in April, ending extraction at the site.
- Sep 12 Markets priced in a strong chance of another quarter‑point hike in December.
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