Korean won jumps as central bank upgrades growth forecasts

The South Korean won is eyeing its biggest one-day gain in a month after the country’s central bank upgraded its economic growth forecasts for this year and said further interest rates were less necessary than before.

The Bank of Korea this morning kept interest rates on hold at 1.25 per cent, as expected.

But the won started to strengthen as central bank governor Lee Ju-yeol said in a follow-up news conference the BoK now forecast gross domestic product would grow 2.6 per cent in 2017, 0.1 percentage point more than its previous estimate in January.

Mr Lee also said interest rate cuts were less necessary than before, but vowed that monetary policy would remain accommodative.

The won strengthened 1.1 per cent to 1129.4 per dollar, its best one-day gain since March 13.

Today’s move reverses some of the weakness that has occurred in the past few days amid escalating tensions between North Korea, its neighbouring countries and the US.