USD/KRW jumps back above $1,290 despite talks of 'big-step' BOK rate hike

As inflation broadens out in South Korea, a senior Bank of Korea (BOK) official calls for a big-step interest rate hike at its July 13 monetary policy meeting, per Yonhap News Agency.

Key takeaways

"Whether the BOK will take a big-step increase or not greatly depends on June consumer inflation data,"

"Should prices rise 6 percent or higher, calls could get louder for a big-step move."

To tame inflation, the BOK has hiked its policy interest rate five times -- all by a quarter percentage point at a time -- since August last year to 1.75 percent.

Markets are now speculating an unprecedented 0.5 percentage-point hike in borrowing costs next month.

Last week, BOK Gov. Rhee Chang-yong told reporters that all options, including a 0.5 percentage-point rate increase, are on the table should high inflation persist. 

USD/KRW reaction

USD/KRW is heading back towards the daily highs of $1,292.95, as the South Korean won (KRW) fails to capitalize on the hawkish BOK commentary. The spot rebounded from an early drop to $1,289.71 lows.