USD/KRW jumps back above $1,290 despite talks of 'big-step' BOK rate hike

Dhwani Mehta FXStreet

As inflation broadens out in South Korea, a senior Bank of Korea (BOK) official calls for a big-step interest rate hike at its July 13 monetary policy meeting, per Yonhap News Agency.

Key takeaways

"Whether the BOK will take a big-step increase or not greatly depends on June consumer inflation data,"

"Should prices rise 6 percent or higher, calls could get louder for a big-step move."

To tame inflation, the BOK has hiked its policy interest rate five times -- all by a quarter percentage point at a time -- since August last year to 1.75 percent.

Markets are now speculating an unprecedented 0.5 percentage-point hike in borrowing costs next month.

Last week, BOK Gov. Rhee Chang-yong told reporters that all options, including a 0.5 percentage-point rate increase, are on the table should high inflation persist.

USD/KRW reaction

USD/KRW is heading back towards the daily highs of $1,292.95, as the South Korean won (KRW) fails to capitalize on the hawkish BOK commentary. The spot rebounded from an early drop to $1,289.71 lows.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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