Bank of Korea and BSP Rate Hikes: MUFG Asia FX Strategy & Policy Outlook

The Bank of Korea and BSP each hiked policy rates by 25 bps to 3.00% and 5.00%, respectively, but signaled a slower future pace of tightening. MUFG remains tactically short USD/KRW with a tightened stop loss at 1,400 and maintains a bias to receive KRW rates with reduced conviction.

Key Takeaways

• 1.Both the Bank of Korea (BOK) and Bangko Sentral ng Pilipinas (BSP) raised policy rates by 25 bps to 3.00% and 5.00% respectively, but indicated a slower pace of future hikes.
• 2.MUFG maintains a short USD/KRW trade idea, lowering the stop loss/take profit level to 1,400 to manage risk ahead of Jackson Hole.
• 3.Conviction to receive KRW rates has moderated as KRW 1y1y rates have already declined from ~4.2% to 3.89%.

Table of Contents

• Ahead Today
• Bank of Korea and BSP hiked rates – a Homi for your thoughts?
• Market Highlights
• CHART 1: WE CONTINUE TO LIKE RECEIVING KRW RATES GIVEN HOW MUCH HAS BEEN PRICED IN, BUT HAVE SOMEWHAT LESS CONVICTION NOW
• INDICATIVE RATES 27-Aug-2026
• FOREIGN EXCHANGE
• Disclaimer

Report data

CHART 1: WE CONTINUE TO LIKE RECEIVING KRW RATES GIVEN HOW MUCH HAS BEEN PRICED IN, BUT HAVE SOMEWHAT LESS CONVICTION NOW — as of August 27, 2026.

Reports in this series

Asia FX Talk is shown in chronological order through this edition, published on August 28, 2026.

Part of the Asia FX Talk series — view all 47 editions

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5. May 21Asia FX Talk - Jumbo rate hike by Bank Indonesia to defend Rupiah
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