Won Slips on Swap Uncertainty and Soft Economic Data

The South Korean won weakened to around 1,401 per dollar on Tuesday, reversing gains from the previous session, as uncertainties surrounding a prospective bilateral currency swap with the United States and weaker domestic economic indicators weighed on sentiment.

National Security Adviser Wi Sung-lac indicated that the likelihood of securing such an agreement with Washington remains limited, stating that “while our government has proposed a currency swap, the US’s track record suggests it will not be easy”.

Adding to the pressure, recent economic data pointed to softening domestic demand.

Retail sales declined by 2.4% in August, the steepest fall in 18 months and the first decrease in four months, following a 2.7% increase in July.

At the same time, industrial production was flat compared with the previous month, after posting gains in June and July, signaling a potential slowdown in manufacturing momentum.