The South Korean won weakened to around 1,370 per dollar, surrendering its earlier rebound, as a surge in US Treasury yields boosted the greenback. The US 10-year Treasury yield climbed to its highest level since July 2007, while stronger-than-expected US economic data stoked inflation concerns and reinforced expectations of further monetary tightening. Market-implied odds of an additional 25-basis-point Fed rate hike in October rose to about 70% from 55%, pushing the dollar toward its strongest level in nearly two months.
At the same time, oil prices rebounded amid renewed geopolitical risks in the Middle East, with Brent crude climbing above $103 per barrel. That development heightened worries about potential supply disruptions and increased import costs for Korea. In a more positive sign for external conditions, the US and China reportedly agreed to extend their trade truce by two months, providing additional time to negotiate a broader agreement and easing near-term trade uncertainty for two of Korea’s key trading partners.