South Korean Won Slips on US–Korea Rate Gap

The South Korean won slipped to around 1,383 per dollar on Thursday, erasing earlier gains as caution returned following the conclusion of the Federal Reserve’s policy meeting. The Fed cut its benchmark rate to 4.00–4.25%, its first reduction since December, and signaled two more cuts this year. While the move initially weakened the dollar and boosted Asian currencies, Chair Jerome Powell’s warning of a “challenging” outlook tempered sentiment. With the US–South Korea rate gap still at 1.75 percentage points, downside pressure on the won remains, heightening the risk of capital outflows. Adding to the pressure, minutes from the Bank of Korea’s meeting showed most board members backing further rate cuts to counter US tariff headwinds, though debt risks limited action. The board voted 6–1 to hold rates at 2.50%, but its lean toward looser policy reinforced expectations for easing ahead.