S. Korea Rate Rise Boosts Won Pressure in Inflation War

South Korea’s third interest-rate increase since the global financial crisis and the government’s planned price controls may fail to curb inflation unless the won appreciates further, paring the cost of imported goods.

The Bank of Korea raised borrowing costs by a quarter of a percentage point to 2.75 percent yesterday and the government said it aims to freeze utility prices and reduce food tariffs to damp quickening inflation. While the won rose to a two-month high against the dollar after the rate increase, the currency’s climb over the past year is the weakest in Asia outside Hong Kong, which operates a peg to the greenback.