Won Surges to 13-Month High Amid BOK Rate Hike and Warsh Speech

The South Korean won rose to its highest level in over a year against the US dollar after the Bank of Korea unexpectedly hiked its benchmark interest rate by 25 basis points to 3.50%. This move caught many economists off guard, as they had expected the central bank to hold rates steady.

The BOK cited concerns over inflation and household debt as reasons for the rate hike, which attracted foreign capital and boosted demand for the won. The currency's appreciation was also supported by improved risk sentiment in the region and expectations of further monetary tightening by the BOK.

Meanwhile, market participants remained cautious ahead of a speech by Federal Reserve Vice Chair Kevin Warsh, who is expected to offer clues on the central bank's future policy moves. Any hawkish signals from Warsh could strengthen the US dollar and put pressure on Asian currencies.