FX.co ★ South Korean Won Hits Three-Week Low

The South Korean won weakened to around 1,380 per dollar, marking a three-week low as the Federal Reserve’s latest rate hike and hawkish guidance supported further dollar strength. The Fed raised its policy rate by 25 basis points to 3.75%-4.00%—its first increase since 2023—and signaled the possibility of another hike later this year, keeping the US-Korea interest rate gap as wide as 1 percentage point. The wider rate differential continued to underscore the relative yield advantage of dollar-denominated assets, while the dollar index hovered near a seven-week high in the wake of the FOMC decision.

At the same time, foreign investors remained net sellers of Korean assets for a sixth consecutive session, reinforcing demand for the US currency. On the commodity front, oil prices eased from recent highs as Saudi Arabia offered additional crude cargoes and the damaged East-West pipeline was expected to resume operations within days. This provided some relief to Korea’s energy import costs, although Brent crude futures continued to trade above $100 per barrel.