The South Korean won jumped on Wednesday after President Lee Jae Myung said the currency could strengthen to a level unseen since October in the near term, while the Thai baht scaled its highest point in nearly five years on gold’s rally to a record high.
The won rose 0.6% to 1,468.8 per US dollar, rebounding from a near four-week low of 1,480.0 touched on Tuesday, after Lee said authorities expected the currency to strengthen towards the 1,400 mark in a month or two.
The won’s recent weakness has attracted verbal support from the central bank, the government, and even US Treasury Secretary Scott Bessent, who said that the currency’s slide was not in line with fundamentals.
The 1,480 level seems to be the threshold for verbal intervention from authorities to slow the won’s depreciation, said Lloyd Chan, a senior currency analyst with MUFG.
President Lee also said that the domestic stock market, which surged 76% last year and is continuing its unprecedented rally with a 15% advance so far in January, was still undervalued.
The KOSPI was trading marginally lower on the day, although only a few points shy of its all-time high, after a 12-session winning run saw it advance more than 16% in just over two weeks.
In Southeast Asia, the Thai baht gained as much as 0.5% to 30.86 a dollar, its strongest level since late March 2021, although it pulled back to 31 as the day progressed.
The currency remains elevated due to a surge in gold prices, which crossed $4,800 an ounce on Wednesday for the first time.
“The gain is related to the purchase of gold, which resulted in demand for the Thai baht and dollar sales as a result,” said Chan, while pointing to the currency’s historical correlation with bullion.
Meanwhile, the Indonesian rupiah edged lower to 16,963 per dollar, slightly above its record low of 16,985 touched in the previous session.
Bank Indonesia will hold its policy meeting later in the day, where it is expected to keep its key interest rate unchanged at 4.75%, a Reuters poll showed.
Stocks in the region pulled back from record highs on heightened trade tensions over US threats to acquire Greenland, which pulled Wall Street down 2% overnight.
Taiwan’s benchmark stock index slid 1% from a record close the previous day, while main gauges in Singapore and Indonesia also eased away from all-time highs.
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