Fed Rate Hike Sparks Won Slump as Markets Await BOJ Decision

The US Federal Reserve raised its benchmark interest rate by 25 basis points to 3.75-4.00 percent, sending the South Korean won sharply lower on Thursday.

The dollar strengthened against the won, reaching a seven-week high after the decision, and the yield curve flattened as the three-year Korean government bond yield rose while the 10-year yield fell.

The Bank of Japan is widely expected to raise its policy rate from 1 percent to 1.25 percent on Friday, with markets focused on guidance for subsequent increases rather than the hike itself.