Won Climbs to 11‑Month High as BoK Hikes Rates, Dollar Gains Ahead of Jackson Hole

The South Korean Won surged against the U.S. dollar during Thursday’s Asian session, with USD/KRW sliding 0.3% to around 1,380. The move marked a return to the currency’s 11‑month low, spurred by consecutive interest‑rate increases from the Bank of Korea (BoK). In a routine policy meeting, the BoK lifted its benchmark rate by 25 basis points to 3%, aiming to keep inflation—currently at 2.8% year‑on‑year in July—on a downward trajectory toward the 2% target.

Despite a modest easing of inflation from 3.2% in June, the BoK signalled a need for further tightening. The central bank also revised its growth outlook for the year upward to 3.3% from the earlier 2.6% forecast, while keeping the inflation projection unchanged at 2.7%.

The Won’s recent rally reflects sustained dollar inflows into Korea, driven by investor appetite for high‑tech firms in the memory‑chip and semiconductor space. Societe Generale analysts noted that the Won has outperformed other major Asian currencies, rising 12% versus the dollar on a spot basis year‑to‑date. They highlighted the sharp shift in USD/KRW from roughly 1,560 in early June to below 1,380, a move they view as evidence of optimism around AI and semiconductor growth.

Additional support for the Won comes from corporate activity: SK Hynix and Samsung announced sizable share‑buyback programmes—$28 bn and $80 bn respectively—creating won‑to‑dollar conversion flows that could further bolster the currency.

On the dollar side, the latest U.S. Personal Consumption Expenditure (PCE) data for July gave the currency a boost. Core PCE inflation held steady at 3.3% year‑on‑year, matching expectations and reinforcing the Fed’s focus on price stability.

With the BoK’s hawkish stance on inflation, market participants view any further rate hikes as bullish for the Won, whereas a dovish shift could weaken it. The upcoming Jackson Hole symposium will also be closely watched for clues on U.S. monetary policy.