Won weakens past 1,360 as U.S. yields and oil prices climb

  • The Korean won weakened beyond 1,360 per dollar during daytime trading.
  • The won closed at 1,359.4, weakening 12.1 won from the previous session.
  • The FOMC meets on the 15th and 16th amid expectations of a rate increase.

The Korean won weakened beyond 1,360 per dollar as the U.S. 10-year Treasury yield returned above 5% and Brent crude climbed to $106-$107 a barrel. The won closed daytime trading at 1,359.4 per dollar, down 12.1 won from the previous session, after touching 1,360.3, its weakest level in nine sessions. Dollar demand was reinforced by expectations of a Federal Reserve rate increase, the National Pension Service's suspension of currency hedging, reduced exporter dollar sales and continued foreign net selling of Korean stocks. Markets are focused on the Federal Open Market Committee's 15th-16th meeting, where a 0.25 percentage-point increase is considered likely, but the dot plot, inflation forecasts and subsequent policy guidance may have greater implications for the exchange rate. Analysts say a hawkish outcome could weaken the won further in the short term, while yen strength and Korea's trade surplus could eventually help the exchange rate ease toward the low 1,300s.

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