The South Korean won weakened against the U.S. dollar, driven by a combination of surging international oil prices and growing concerns over potential interest rate hikes by the U.S. Federal Reserve. In the Seoul foreign exchange market, the reference exchange rate for the won-to-dollar closed at 1,345.9 won, up 6.7 won from the previous session. 

The trading day saw significant volatility. The exchange rate opened sharply higher, touching 1,349.9 won in early morning trading at 8:53 a.m., pressured by renewed inflation jitters. However, the rate later pared some of its gains, dropping to a low of 1,343.0 won by 1,300 p.m., before settling at 1,345.9 won by the 3:30 p.m. market close. 

Market sentiment was heavily influenced by the release of the U.S. Producer Price Index (PPI) for August. According to the U.S. Department of Labor, the August PPI rose 0.4% from the previous month and spiked 5.4% compared to the same month last year, exceeding market expectations. This stronger-than-expected inflation data heightened market expectations that the Federal Reserve might lean toward a rate hike or signal a hawkish pause during the upcoming Federal Open Market Committee (FOMC) meeting scheduled for September 15–16. 

Compounding inflation fears, geopolitical tensions in the Middle East fueled worries of a prolonged conflict, sending global crude oil prices soaring past the $100-per-barrel threshold. On the New York Mercantile Exchange, West Texas Intermediate (WTI) crude for October delivery settled at $102.48 per barrel, while Brent crude for November delivery reached $107.63 per barrel. Both benchmarks hit their highest levels since May 19, intensifying cost-push inflation pressures globally.

Despite these upward pressures on the exchange rate, a full-scale surge was partially contained. Exporting and semiconductor companies stepped up dollar-selling (nego) flows to take advantage of higher rates, acting as a natural ceiling against further won depreciation. Additionally, shifting monetary policy expectations surrounding the Bank of Japan—including hints of potential policy tightening and heightened scrutiny by U.S. authorities over excessive yen weakness—provided subtle stabilization counterweights across regional foreign exchange markets, indirectly supporting the local currency.

Financial analysts note that as global macroeconomic uncertainties persist, the path of the won-dollar exchange rate will heavily depend on the upcoming Fed policy decisions, incoming employment and retail data, and the stability of energy commodity markets heading into the final quarter of the year.