The Korean won weakened to the upper 1,360s against the dollar as rising international oil prices and U.S. Treasury yields fueled dollar strength. The won had fallen rapidly in recent sessions but rebounded as the greenback held firm ahead of the Federal Open Market Committee's policy decision.
In the Seoul foreign exchange market on Sept. 16, the won closed at 1,368.6 per dollar, weaker by 9.2 won from the previous session. After opening at 1,364.0, the currency crossed the 1,370 level during the session for the first time since Sept. 2, before paring some of its losses in the afternoon.
Oil prices above $100 a barrel, combined with rising U.S. Treasury yields, underpinned the dollar. Brent crude traded in the $108 range and West Texas Intermediate in the $105 range, while the 10-year U.S. Treasury yield rose above 5% intraday after hitting that level the previous day.
U.S. Treasury Secretary Scott Bessent told a House Financial Services Committee hearing on the 15th that the recent rise in long-term rates reflected global factors and the need to reduce the fiscal deficit. Bessent said the Treasury Department's bond buyback program had helped stabilize markets and described the U.S. Treasury market as sound and deep, but offered no clear plan for further steps to calm rates or for specific fiscal consolidation measures.
He also said the department was seeking ways to advance President Donald Trump's cash payment pledge without widening the fiscal deficit, alongside deficit reduction, but did not specify funding sources. Market participants said the hearing fell short of resolving uncertainty and that financial market instability, including rising Treasury yields, could persist.
Attention now turns to the FOMC decision due late in the day. With high oil prices and rising long-term U.S. rates strengthening expectations of a Federal Reserve rate increase, the direction of the dollar and the won is expected to hinge on the actual rate decision and the outlook for monetary policy.
