28.08.202502:47:54UTC+00South Korean Won Gains as BOK Holds Rates, Softer Dollar

The South Korean won strengthened to approximately 1,390 against the dollar on Thursday, building on gains from the previous day. This uptick was largely influenced by the Bank of Korea's decision to maintain its base interest rate at 2.50%, coupled with a continued decline in the US dollar. During its policy meeting on Thursday, the central bank adopted a cautious approach, focusing on household debt and the real estate market in the wake of recent regulatory measures. It also considered government stimulus initiatives and external challenges such as US tariffs and potential actions by the Federal Reserve. The decision to hold the rate steady had been widely anticipated, providing limited new impetus, while the weakness of the US dollar primarily fueled the won's appreciation. The US dollar retreated following dovish comments from Federal Reserve officials, which bolstered expectations of a rate cut in September. Domestically, the Bank of Korea increased its GDP growth forecast for 2025 to 0.9%, indicating a tempered optimism for the economic outlook, while retaining the option for future rate cuts later in the year, contingent on financial stability and global developments.