The South Korean won held around 1,386 per dollar on Wednesday, nearing two-month lows amid renewed dollar strength. This followed the release of stronger US inflation data, which appeared to lower expectations of a Federal Reserves rate cut in July. On the domestic front, South Korea’s labor market remained firm, with the unemployment rate edging down to 2.8% in June.
This sustained low jobless rate is seen as a sign of underlying economic resilience, offering some support to the won, even as the country navigates rising external uncertainties and slowing global demand. However, recent data showed continued declines in both export (-4.5% YoY) and import prices (-6.2% YoY), amid weaker global demand, a firmer won, and falling energy and raw materials costs. These pressures, along with the possibility of rate cuts by the Bank of Korea, may cap further gains for the KRW in the near term.
