South Korean Won Holds Firm on Fed Outlook

The South Korean won traded around 1,388 per dollar on Thursday, showing little change for a second straight session, as the greenback held steady ahead of key US inflation data. A weaker-than-expected reading in producer prices for August added to expectations that the Federal Reserve will lower rates at its September meeting, with markets largely pricing a 25 basis point cut while still considering a larger half-point cut. Domestically, the KOSPI continued to push into record territory, lifted by strong demand for semiconductor shares and renewed foreign buying. Hopes that authorities may adjust capital gains tax rules also contributed to the upbeat sentiment in equities, reinforcing support for the won against a backdrop of firmer risk appetite. Investors now look ahead to US consumer inflation figures later in the day for further clues on the Federal Reserve’s policy path and future moves in the dollar.