BOK stands pat as weak won returns

Bank of Korea Gov. Rhee Chang-yong bangs the gavel at a rate-setting meeting Thursday. (Joint Press Corps)

The Bank of Korea held the base rate steady Thursday, citing renewed concerns over currency depreciation despite authorities’ efforts to boost the won’s value at the end of last year.

The central bank kept the benchmark rate unchanged at 2.5 percent, extending a pause that has been in place since a cut of 0.25 percentage point in May.

The BOK’s rate decision stems from the won’s recent depreciation against the US dollar. The currency has retraced most of the gains made late last year, when strong verbal intervention by authorities and strategic foreign-exchange hedging by the National Pension Service strengthened the won to the level of 1,420 per dollar from the 1,480s.

Though the won opened at 1,465 per dollar in onshore trading Thursday, gaining 12.5 won from the previous session, following a rare overnight remark by US Treasury Secretary Scott Bessent, widely seen as a form of verbal intervention, the rebound does not represent a fundamental shift, industry officials said.

With a rate cut likely to further widen the rate gap with the US Federal Reserve, potentially triggering capital outflows and increasing downward pressure on the Korean won, the central bank kept the rate steady.

With the BOK’s rate decision in place, the market awaits the US Federal Open Market Committee’s rate-setting meeting, to take place Jan. 27-28.