South Korean Won Falls for Fourth Straight Session on Fed Hawkishness and Risk Aversion

The South Korean won fell for a fourth straight trading day as the Federal Reserve's hawkish stance and weaker risk appetite weighed on the currency. According to Sina Finance, the dollar rose 0.4% against the won to 1,381.65, after gaining more than 2% over the previous three sessions. One-month implied volatility for the dollar-won pair was 10.0975%, up from 10.075% on Wednesday. The 200-day moving average for the pair was about 1,466.06, while the 100-day moving average was 1,462.80 and the 50-day moving average was 1,413.04. Ha Keon-hyeong, an economist at Shinhan Investment, said that U.S. rate hikes could widen the interest-rate gap with South Korea and pressure the won in the short term, but he expected the currency not to keep weakening because U.S. fundamentals are not better than South Korea's. Exporters are expected to keep converting dollars into won until early next year, before bonus payments and corporate tax payments, which could keep foreign-exchange settlement demand elevated. On investment in the U.S., the South Korean government said it would finance through bond issuance or use funds already raised, so the direct short-term impact is likely limited.