KRW: BoK defends won as oil shock bites – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank’s Moses Lim notes that higher Oil prices and heavy reliance on Middle Eastern crude have kept KRW volatile, with USD/KRW trading between 1,420 and 1,500 and the won down year-to-date. He expects the Bank of Korea to hold rates, focus on FX stability, and potentially smooth markets using ample reserves.

Hawkish guidance and FX smoothing ahead

"USD/KRW has fluctuated between the 1,420-1,500 range since December 2025."

"Year-to-date, KRW is down 1.8% against the dollar."

"BoK Deputy Governor Ryoo Sang-dai issued some hawkish guidance yesterday and warned that intervention risks are rising as BoK deems recent movements in the KRW as diverging from economic fundamentals."

"We expect BoK to engage in smoothening operations in both the onshore and offshore KRW market."

"We expect BoK to leave rates unchanged for the time being and adopt a wait-and-see attitude."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

USD/JPY hovers below 160.50 intervention zone ahead of FOMC decision

USD/JPY remains below the 160.50 intervention zone in the Asian session on Wednesday. Despite the BoJ's rate hike to its highest level since 1995, Japan's borrowing costs remain significantly lower than the US, undermining the Japanese Yen. However, thpair US Dollar remains on the back foot amid the optimism over the US-Iran peace deal and ahead of the Fed policy decision, weighing on the pair.

AUD/USD holds steady above 0.7050; looks to Fed for fresh impetus

AUD/USD is consolidating above mid-0.7000s in the Asian session on Wednesday as traders await the outcome of a two-day FOMC meeting due later in the day. In the meantime, the optimism over an interim peace deal between the US and Iran keeps the US Dollar bulls on the defensive. This, along with the RBA's hawkish pause on Tuesday, acts as a tailwind for the pair.

Gold buyers lack conviction as Fed policy decision looms

Gold is holding its five-day winning streak near $4,350 in Asian trading on Wednesday, but remains within this week’s familiar range. Traders look forward to the all-important US Federal Reserve monetary policy decision for a clear directional impetus.

Bitcoin holds $65,000 as Uniswap and Worldcoin extend rally

Bitcoin (BTC) is experiencing headwinds above $65,000 following the Bank of Japan’s rate hike to 1% on Tuesday. Still, Uniswap (UNI) and Worldcoin (WLD) continue to rally amid rising retail interest, while Bitcoin’s recovery grows heavy. Bitcoin edges higher at press time on Wednesday, inching closer to $66,000 as it maintains a mixed near-term tone following the recent rebound from $60,000.

The most important event will be the Fed meeting with Mr. Warsh now in charge

The most important event will be the Fed meeting on Wednesday, with Mr. Warsh now in charge. As more than one analyst points out, the case for holding rates the same is strengthened by the Iran deal and the prospect of the Strait re-opening, although nobody thinks Warsh can marshal enough doves to do a cut this time.

Why a hawkish RBA is no longer enough to lift the Australian Dollar

The Reserve Bank of Australia delivered more than what markets expected: a hawkish hold that should have supported the Aussie. But markets widely ignored it, focusing instead on slowing economic growth and proving that central bank messaging alone isn’t always enough to drive currencies.