Korean won weakens to 13-year level after Fed rate increase

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South Korea’s forex weakened to a 13-year low in opposition to the U.S. greenback after the Federal Reserve’s interest-rate increase and projections spurred a risk-off temper in Asia.

The greenback
USDKRW,
+1.12%

rose to as prime as 1,410.05 in opposition to the won all through morning Asian buying and selling, the best possible intraday level since March 2009, in accordance to FactSet. The greenback used to be not too long ago 0.7% upper at KRW1,407.98, whilst the Kospi inventory index
180721,
-0.63%

used to be down 1.0% at 2323.70. The ICE U.S. Dollar Index
DXY,
+0.95%

used to be up 0.9% at 111.60.

“The Korean won has historically tended to be the most sensitive Asian currency to both risk sentiment and the U.S. dollar,” Alvin T. Tan, head of Asian FX Strategy at RBC Capital Markets, stated in an e-mail. “So if we have both equities down and dollar up strongly, like we do currently, then Korean won will likely suffer the worst among Asian currencies,” Mr. Tan stated.

The won’s weak spot got here after Fed officers voted unanimously in a single day to elevate the benchmark federal-funds rate via 0.75 share level to a spread between 3% and three.25%, a level closing observed in early 2008. Almost the entire officers be expecting to elevate charges additional, to between 4% and four.5% via year-end, in accordance to new projections launched Wednesday, suggesting huge rate will increase at coverage conferences in November and December.

Write to Ronnie Harui at ronnie.harui@wsj.com

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