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2025.09.1202:09:36UTC+00Korean Won Gains on Fed Cut Bets, Policy Shift

On Friday, the South Korean won strengthened to approximately 1,388, as the US dollar experienced a decline driven by heightened expectations of Federal Reserve rate cuts. This shift follows the latest US inflation data, revealing a 0.4% monthly rise and a 2.9% annual increase in August—figures still above the Fed’s 2% target. Investors viewed the data as moderate, suggesting a possible policy adjustment during the Federal Reserve's September meeting, especially considering the ongoing labor market weakness. Domestically, President Lee Jae Myung abandoned plans to adjust the capital gains tax on stock investments, citing concerns that the proposed changes could destabilize the market. This decision, following criticism from retail investors, reduced policy uncertainty and improved market sentiment.

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