The South Korean won weakened to around 1,460 per dollar on Monday, extending losses near a three-week low, as markets remained cautious ahead of the Bank of Korea’s policy decision. With the central bank widely expected to hold rates steady this week, policymakers’ constraints from exchange-rate volatility and elevated housing prices leave little scope for near-term easing, keeping Korea’s yield disadvantage intact. Adding to the caution, authorities are monitoring rising US dollar deposits at domestic banks as households and firms step up hedging amid currency weakness. While the checks themselves are not a tightening measure, they underscore sensitivity around FX stability and highlight persistent demand for dollars, reinforcing near-term depreciation pressure. Meanwhile, the dollar eased modestly on the day, but expectations that US rates will remain higher for longer continued to cap any meaningful recovery in the won.
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