There is a possibility of high inflation lasting longer than expected due to chances of a rebound in global commodity prices and continued inflation pressure on the demand side, South Korea's central bank, the Bank of Korea (BOK), said on Wednesday.

The central banks added that the South Korean won's recent weakness was driven by the Chinese yuan's depreciation and continuing trade deficits.

Meanwhile, the country’s President Yoon Suk-yeol said “the main risks to South Korea's worsening trade balance are sluggish exports to China, high global energy prices and weak semiconductor exports.”

Market reaction

The above comments exacerbate the pain in USD/KRW, as it corrects further from multi-year highs of 1,355.50 reached on Tuesday. At the time of writing, the pair sheds 0.87% on the day to trade at 1,338.73.