The USD-KRW exchange rate opened higher, in the low 1,340s. The dollar gained strength after U.S. Consumer Price Index (CPI) data, released the previous night, came in above market expectations.

In the Seoul foreign exchange market on Wednesday, the USD-KRW rate opened at 1,343.5 KRW per dollar, up 6.0 KRW from the previous session's daytime close of 1,337.5 KRW.

The dollar rose overnight after the U.S. inflation figures were published. The Dollar Index, which measures the dollar against six major currencies, climbed 0.591 points from the previous session to 102.244.

In October, the U.S. CPI and core CPI rose 0.4% and 0.3% from the previous month, respectively, exceeding market forecasts of 0.3% and 0.2%. Headline inflation slowed from 0.6% in September, but the disinflation was slower than expected, which sharpened fears of further monetary tightening.

Before the data release, Christopher Waller, a Federal Reserve governor, had raised the possibility of a half-percentage-point rate increase in December. His remarks also supported the dollar. Rising U.S. Treasury yields weighed on the EUR and the JPY against the dollar.

Min Kyeong-won, an economist at Woori Bank, said the prospect of a large Fed rate increase and a stronger dollar would put upward pressure on the exchange rate in South Korea. He also pointed to payment demand from importers and demand from domestic investors who convert KRW to buy overseas stocks as factors that would add to dollar purchases.

He expected dollar sales by exporters, known as nego volumes, to limit the rise in the exchange rate, with semiconductor makers among them. Because chipmakers keep selling dollars with little regard for the exchange rate level, he said, they could slow the pace of the rise during the trading day.

In a report that day, Min said that the prevailing view is that conditions do not yet warrant an immediate big-step hike, but the fact that a senior Fed official mentioned a 50-basis-point increase, together with rising Treasury yields, adds to the burden of a strong dollar.

The USD-KRW exchange rate opened higher, in the low 1,340s. The dollar gained strength aft …

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