South Korean Won: Policy tightening expectations lift KRW against US Dollar – Commerzbank

FXStreet Insights Team FXStreet

Commerzbank Research notes that USD/KRW has fallen to its lowest level since February as South Korean authorities tighten rules on leveraged ETFs to curb Kospi volatility. Expectations of further Bank of Korea (BoK) tightening, driven by Governor Shin Hyun-sung’s comments on inflation, and export earnings repatriation have supported the Korean Won (KRW) despite sharp equity market losses.

Won gains as regulators act

"The Finance Ministry announced additional measures to curb equity market volatility following an emergency meeting yesterday."

"To stabilize the market, authorities plan to curb retail participation in leveraged ETFs by capping portfolio exposure to these products and raising trading costs."

"The latest measures build on those announced in mid-July, including a suspension of new leveraged ETF listings and an increase in the minimum account balance required to purchase existing leveraged ETFs to KRW30mn from KRW10mn."

"The Finance Ministry faces mounting political scrutiny over whether single-stock leveraged ETFs amplified the recent market volatility. During a parliamentary hearing yesterday, opposition lawmakers from the People’s Power Party questioned the rapid rollout of leveraged ETFs despite prior warnings from the asset management industry."

"In FX, USD/KRW fell 0.7% to 1,444 yesterday, reaching its lowest level since 27 February. This was partly driven by rising expectations of further monetary tightening after BoK Governor Shin Hyun-sung told a parliamentary committee that tighter monetary policy may be needed to address mounting inflationary pressures. The pair has fallen 7.3% since 1 July as export earnings repatriation activity accelerated."

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

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.

AUD/USD edges higher as hot CPI inflation and hawkish RBA lift rate hike bets

The AUD/USD pair gathers strength to near 0.7035 during the Asian trading hours on Friday. The Australian Dollar edges higher against the US Dollar as hotter Australian CPI inflation data has bolstered expectations of Reserve Bank of Australia rate hikes.

USD/JPY meets support near 157.00

USD/JPY retreats for the third consecutive day on Friday, revisiting the 157.00 region before attempting some recovery as investors continue to assess the latest BoJ meeting, where the central bank left rates unchanged, as widely anticipated.

Gold sinks to fresh yearly lows despite risk-off mood as Fed rate hike bets weigh

Gold slips to fresh year-to-date lows on Friday. The metal struggles despite a risk-off mood across markets, as expectations of further Federal Reserve (Fed) interest rate hikes continue to dominate price action, leaving Gold on track to end the month in negative territory.

Ripple Price Forecast: XRP bulls defend $1.20 as sell-side pressure triggers liquidations

Ripple (XRP) trades around $1.25 on Friday, rising from a short-term support level established at $1.20. This minor upward correction follows a sharp sell-off, triggered amid reports of a hack attack on the Binance exchange that impacted approximately $6.3 billion. The attack drove the broader crypto market on edge, as Binance suspended both deposits and withdrawals to contain the situation.

BoJ recap: A pause for now... but Japan has entered a new inflation phase

The Bank of Japan left its short-term policy rate unchanged at 1.25% but delivered a distinctly hawkish message on the risk of an inflation overshoot. The decision passed by 8-1, with board member Takata dissenting in favour of an increase to 1.5%, while Governor Kazuo Ueda stressed that the Bank would continue adjusting policy as needed.

A hot US economy is supposed to sink Gold. It didn't. Here's why

Gold (XAU/USD) remains under pressure near $4,000, as stronger-than-expected United States (US) economic data reinforce expectations of another Federal Reserve (Fed) interest rate hike in December. Economic growth is accelerating, inflation remains elevated, and borrowing costs could rise further.