FX.co ★ South Korean Won Falls on Dollar Strength

The South Korean won depreciated to approximately 1,390 against the dollar on Friday, continuing its losses for the second consecutive session. This movement came as the US dollar maintained its strength following the release of robust US Producer Price Index (PPI) data. For July, US wholesale prices climbed by 0.9% month-on-month—the sharpest rise in three years—and increased by 3.3% year-on-year, significantly exceeding market expectations. These figures led investors to temper their predictions for a substantial Federal Reserve rate reduction by half a percentage point in September, although a smaller cut of 25 basis points is still largely expected. Domestically, investor sentiment was negatively affected by an ongoing slump in manufacturing, where key export-dependent sectors such as petrochemicals, steel, and automobiles are grappling with weak demand, intensified overseas competition, and oversupply issues. The persistent weakness in these industries has heightened concerns regarding Korea’s export prospects.