USD/KRW surges as Bank of Korea warns weak won threatens inflation stability

USD/KRW continues its upward trajectory, trading near multi-year highs as the Bank of Korea expressed concerns about the won's persistent weakness potentially fueling inflationary pressures. The central bank warned that the currency's divergence from economic fundamentals poses risks to price stability, suggesting possible intervention measures ahead. Meanwhile, broader risk sentiment improved after Trump administration backtracked on proposed Italian pasta tariffs following industry resistance, easing some trade tension concerns. Australian economic data provided regional support with Manufacturing PMI holding steady at 51.6 in December, maintaining expansion territory. The won's depreciation reflects ongoing dollar strength and concerns about South Korea's export competitiveness amid global trade uncertainties. Technical indicators suggest USD/KRW faces immediate resistance at recent highs, while any BOK intervention could provide temporary support for the won. Traders should monitor upcoming BOK policy statements for potential currency stabilization measures.