Forex News: South Korean Won Rises To More Than 2-month

South Korean Won Rises To More Than 2-month High After BoK Rate Decision

(RTTNews) - The South Korean won strengthened against the U.S. dollar in the European session on Thursday, after the Bank of Korea raised its benchmark interest rate for the first time since 2023 as inflation is projected to stay above 2 percent target for a considerable time.

The Monetary Policy Board of the Bank of Korea unanimously decided to hike the base rate by 25 basis points to 2.75 percent.

The bank raised its interest rate for the first time since January 2023. Today's decision came in line with expectations.

Further, stronger domestic economic growth supported today's decision. The economy strengthened further as exports and investment continued to grow strongly. Economic growth for this year is expected to considerably exceed the May forecast of 2.6 percent.

Recent U.S. inflation data helped to reduce expectations of near-term Federal Reserve interest-rate increases, there are fears that higher energy prices as a result of mounting geopolitical risks in the Middle East could keep interest rates elevated.

Amid continued conflict, missile strikes, and diplomatic efforts surrounding Iran, U.S. President Donald Trump has defended Washington's military action against Iran and said Teheran will be "defeated very soon".

After the U.S. executed daylight airstrikes killing at least seven Iranian troops, Iran's top negotiator, Mohammed Bagher Ghalibaf, has declared that the county's armed forces have "complete freedom of action" against the "enemy's aggression".

Iran is fighting an "existential war" against the United States as Washington pursues objectives that extend beyond changing Iran's government, Ghalibaf said.

Media reports suggest that Trump is leaning toward further expanding U.S. military operations in Iran, including sending ground forces and the possible seizure of Kharg Island, Iran's primary oil export terminal.

Against the U.S. dollar, the won rose to more than a 2-month high of 1477.54 from an early low of 1489.29. At yesterday's close, the won trading at 1485.88 against the greenback.

If the won extends its uptrend, it is likely to find resistance around the 1440.00 region.

Looking ahead, Canada housing starts for June, U.S. retail sales data for June, U.S. weekly jobless claims data for June, U.S. NY Fed services activity index for July, U.S. Philly Fed business conditions for July, U.S. business inventories for May, U.S. NAHB housing market index for July and U.S. pending home sales for June are slated for release in the New York session.

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