Won Bears Bet Even the Most Hawkish BOK Will Fail to Match Fed
- Currency may weaken to 1,500 per dollar as yield gap widens
- Asia policy makers ‘behind the curve’ on need for higher rates
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Currency traders are betting there’s more downside ahead for the beleaguered won as efforts by policy makers to stem its decline are outpaced by the Federal Reserve’s most aggressive tightening campaign since the 1980s.
The won has slumped more than 16% to 1,421.60 per the dollar this year and forecasters including Bank of America Corp. predict it may weaken to 1,500 by year’s end as traders focus on the widening yield gap with the US. Swap markets expect the Bank of Korea to take its policy rate to 3.5% in the next six months, a 14-year high, while economists are pricing in a peak of around 5% for the Fed’s benchmark in early 2023.