South Korean Won Holds Firm

The South Korean won traded around 1,360 per dollar, holding onto recent gains, as strong earnings prospects for Korean chipmakers continued to underpin the currency. Major Korean chipmakers are expected to report robust third-quarter results amid strong global demand for chips, keeping the outlook for export revenues and foreign-currency inflows favorable. At the same time, the finance ministry and Bank of Korea agreed to step up cooperation on financial market monitoring and response, while seeking a harmonious policy mix between economic and monetary policies. Meanwhile, higher US Treasury yields during the Chuseok holiday raised concerns over wider interest-rate differentials and further Fed hikes. Additionally, Brent crude rose above $105 a barrel amid uncertainty over the Strait of Hormuz, increasing Korea’s import costs and inflation concerns.

The South Korean won weakened to around 1,365 per dollar, reversing gains after a sharp rebound, as elevated US Treasury yields lifted the dollar. The US 10-year Treasury yield hovered near its highest level since June 2007, while hawkish Federal Reserve comments reinforced expectations for further policy tightening. The probability of another 25-basis-point Fed rate hike in October rose to roughly 70%, keeping the dollar near its strongest level in almost two months. Additionally, oil prices remained elevated, with Brent settling at $106.60 a barrel and WTI at $94.61, although reports of US-Iran talks on a phased deal to ease the Persian Gulf standoff reduced immediate concerns over supply disruptions. Meanwhile, the US and China reportedly reached a new trade arrangement and agreed to extend their trade truce until January 10, reducing near-term trade uncertainty for Korea’s major trading partners.

The South Korean won strengthened to around 1,351 per dollar, extending its sharp rebound as oil prices continued to fall. US President Donald Trump said a meeting between US and Iranian representatives was “very good,” raising hopes for a diplomatic breakthrough, while oil prices subsequently fell for a sixth straight session, easing inflation concerns and reducing demand for the dollar. Additionally, South Korea’s strong export performance continued to underpin the won, with exports surging 78% year-on-year in the first 20 days of September, driven by a 259% jump in semiconductor exports and boosting dollar inflows. At the same time, the Asian Development Bank raised its 2026 growth forecast for South Korea to 3.2% from 2.6%, citing strong exports and corporate earnings amid the AI boom. However, the dollar remained relatively firm as hawkish Federal Reserve remarks kept markets pricing roughly a 54% chance of another rate hike in October.