(LEAD) Won hits over 13-yr low following disappointing U.S. inflation data, rate hike woes

All News 10:15 September 14, 2022

(ATTN: ADDS gov't response meeting, stock tradings in last 5 paras)

SEOUL, Sept. 14 (Yonhap) -- The South Korean currency on Wednesday tumbled below the 1,390 won mark against the greenback for the first time in over 13 years as the higher-than-expected inflation data in the United States stoked worries over the Federal Reserve's more aggressive monetary tightening.

The local currency had been trading at 1,394.7 won against the U.S. dollar as of 9:26 a.m., down 21.1 won from the previous session's close. The won dipped to as low as 1,395 at one point.

This marked the first time the won has fallen through the 1,390 won mark since March 31, 2009.

The tumble came hours after the U.S. government announced the country's consumer price index jumped 8.3 percent in August from a year earlier, higher than market expectations of an 8 percent rise.

The latest inflation data disappointed investors hoping to see eased inflation pressure in consideration of recent oil price declines and stoked worries the Federal Reserve will push for more aggressive monetary tightening down the road.

Market experts predict the Fed will likely deliver at least a 75-basis-point rate hike next week following increases of the same magnitude in June and July to tame runaway inflation.

The gloomy data battered U.S. shares overnight. The Dow Jones Industrial Average sank 3.94 percent, and the tech-heavy Nasdaq dived 5.16 percent.

South Korean shares also got off to a weak start, with the Korea Composite Stock Price Index (KOSPI) tumbling more than 2 percent in the early morning trading.

In the wake of the unstable market situation, the government vowed to beef up policy efforts.

"Growing uncertainties over major nations' potential interest rate hikes have caused greater financial market volatility both at home and abroad," First Vice Finance Minister Bang Ki-sun said during an emergency economic task force meeting earlier in the day.

He called for the close monitoring of the financial and the foreign currency market with "extra caution" and reviewing all measures available to deal with the volatility.