The South Korean won extended intraday gains against the dollar on Thursday, after the Bank of Korea’s widely expected cut in interest rates and comments from its governor that were not perceived as bearish for the currency.
The local currency ended up 0.8 percent on Thursday at 1,021.2 against the dollar as market participants sold dollars for the won after the governor’s comments. It was the largest intraday gain for the won since May 7 this year.
Gov. Lee Ju-yeol stressed Thursday’s policy decision was in order to bolster consumer sentiment pre-emptively rather than on dire economic conditions, leading many analysts to view Thursday’s rate cut as a one-off move.
But a snap poll conducted by Reuters showed that others believed the more changes may be down the road in terms of interest rates.
In the poll, 23 of the 24 analysts surveyed predicted the Bank of Korea would hold the base rate steady at 2.25 percent in September. It cut the rate by 25 basis points on Thursday for the first time in 15 months. In the same survey, 11 out of the 18 analysts picked the next move to be a rate hike, while the rest were picking another cut ― a similar split seen earlier this week.
(From news reports)
