Bank of Korea Hikes Base Rate to 3.0%, Won Strengthens Against Dollar

The Bank of Korea raised its Base Rate by 25 basis points to 3.0%, marking the second consecutive interest rate hike. This move follows 50 basis points of cumulative increases since July, and indicates a continued tightening bias from the central bank.

The decision was accompanied by dot guidance showing 21 points, with 10 at 3.25% and six at 3.50%, as well as five at 3.00%. The median suggests one additional 25 basis point move over the next six months.

Following the announcement, the Korean won strengthened against the US dollar, with USD/KRW slipping from 1,385 to around 1,378. This represents a 12% gain for the won versus the dollar since end-June, and analysts expect further appreciation to be incremental.