Korean won slides on surprise rate cut


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South Korea’s currency slid in value after the country’s central bank unexpectedly cut its benchmark interest rate to a new record low.

The won fell 0.3% against the US dollar after the Bank of Korea cut the seven-day repurchase rate by 25 basis points to 1.25%.

The Kospi stock index rose 0.2%.

The decision comes amid a government push to restructure highly indebted companies which are weighing on the economy.

Krystal Tan from Capital Economics said there could be further rate cuts in the coming months.

“As things stand, the economy is already in a fragile state and could certainly use more support.”

China inflation

Other Asian stock markets are erasing earlier gains and falling following weaker-than-expected Chinese inflation data.

Consumer prices on the mainland rose 2% in May from a year earlier, compared to estimates for 2.2% increase.

Producer prices fell by 2.8% which was below estimates for a fall of 3.2%.

Both the Nikkei 225 and the broader Topix are down by 0.9% while in Australia, shares are 0.2% lower.

New Zealand’s main index rose 0.2% after its central bank kept interest rates on hold due to concerns about rising home prices.

Markets in China, Hong Kong and Taiwan are closed for a public holiday.

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