With Jihoon Lee and Yena Park
SEOUL (Reuters) – South Korea's won fell to its weakest in 15 years on Thursday, weighed down by risk-averse sentiment after the U.S. Federal Reserve's cautious stance on more interest rate cuts, as well as uncertainty domestic politics.
The gain was quoted at 1,448.9 per dollar in onshore trade as of 0518 GMT, after opening the session at 1,453.0 per dollar, 0.96% lower than the previous day and the weakest since March 16, 2009.
The US central bank cut interest rates on Wednesday, as expected, but Federal Reserve Chairman Jerome Powell said further reductions in borrowing costs now depend on further progress in reducing high inflation.
US central bankers now project just two quarter-percent rate cuts next year, half a percentage point less than expected in September, with higher inflation forecasts for the first year of the new Donald Trump administration.
The hawkish stance pushed the dollar and added downward pressure on the win, which was already dampened by domestic political turmoil after President Yoon Suk Yeol's attempt to impose short-term martial law. earlier this month.
Taking into account the negative economic impact of the martial law order on December 3, the Bank of Korea on Wednesday highlighted downside risks to its economic growth forecasts for this year and next.
So far in December, the winner has weakened 3.9% against the dollar, extending losses for the third month in a row.
The winner, down 11% year to date, is the worst performing Asian currency this year and is expected to record its worst year since 2008.
Before the market opened on Thursday, South Korea's finance minister said the government and central bank would quickly and boldly implement measures to stabilize financial markets if volatility was seen as excessive.
“It is suspected that authorities are protecting the 1,450 number, making it difficult to short the gain around the level,” said one local currency trader.
To help ease the pressure on the currency, the country's Financial Services Commission asked local banks to flexibly manage foreign exchange transactions and loans.
Bank of Korea extended its foreign exchange swap line with the National Pension Service, a market stabilizing tool that absorbs dollar demand due to growth in overseas investment by the world's third largest pension fund .
In the stock market, the benchmark fell as much as 2.5%, as foreigners sold local shares.
