South Korean Won Rises Sharply Following Bessent's Comments

The South Korean won rallied nearly 1% towards 1,460 per dollar, recovering some of this year's losses following criticism from US Treasury Secretary Scott Bessent regarding the currency's excessive depreciation. Prior to his comments, the won had declined by over 2% year-to-date, approaching its weakest level since 2009. Bessent emphasized that the currency should mirror Korea's robust economic fundamentals, expressing these views after discussions with Finance Minister Koo Yun Cheol. Concurrently, local authorities are gearing up to issue FX stabilization bonds possibly by late January, with the issuance cap raised to $5 billion for the year, indicating a readiness to enhance reserves and safeguard the currency. Investors are also anticipating the Bank of Korea's upcoming policy decision, with expectations leaning towards unchanged rates due to exchange-rate fluctuations and high housing prices constraining immediate easing measures.