By Jihoon Lee and Yena Park

SEOUL (Reuters) -The South Korean won dropped to its weakest level in 15 years on Thursday, weighed down by risk-averse sentiment after the U.S. Federal Reserve's cautious stance on more interest rate cuts, as well as domestic political uncertainty.

The won was quoted at 1,448.9 per dollar in onshore trade as of 0518 GMT, after opening the session at 1,453.0 per dollar, 0.96% lower than the previous day and the weakest since March 16, 2009.

The U.S. central bank cut interest rates on Wednesday, as expected, but Federal Reserve Chair Jerome Powell said more reductions in borrowing costs now hinged on further progress in lowering stubbornly high inflation.

U.S. central bankers now project they will make just two quarter-percentage-point rate reductions next year, half a percentage point less than anticipated in September, with higher projections of inflation for the first year of the new Donald Trump administration.

The hawkish stance pushed up the dollar and added to downward pressure on the won, which had already been weighed down by domestic political turmoil after impeached President Yoon Suk Yeol's short-lived martial law attempt earlier this month.

Taking into account the negative economic impact of the Dec. 3 martial law order, the Bank of Korea flagged on Wednesday downside risks to its economic growth forecasts for this year and next year.

So far in December, the won has weakened 3.9% against the dollar, extending losses for a third consecutive month.

The won, down 11% year-to-date, is the worst performing emerging Asian currency of the year and is set to record its worst year since 2008.

Prior to market open on Thursday, South Korea's finance minister said the government and the central bank would swiftly and boldly deploy measures to stabilise financial markets if volatility was seen as excessive.

"It is suspected that authorities are defending the 1,450 figure, making it difficult to short the won around the level," one local currency trader said.

To help ease pressure on the currency, the country's Financial Services Commission asked local banks to flexibly manage foreign exchange transactions and loans.

The Bank of Korea expanded its foreign exchange swap line with the National Pension Service, a market stabilising tool absorbing dollar demand stemming from growing overseas investment by the world's third-largest pension fund.

In the stock market, the benchmark KOSPI dropped as much as 2.5%, as foreigners sold local shares.

Investing.com-- The Bank of Japan kept interest rates unchanged in a nearly unanimous decision on Thursday, as policymakers remained cautious over Japan’s economic outlook and the path of inflation.

The BOJ kept its benchmark short-term policy rate at 0.25%, in line with a Reuters poll. Eight of the BOJ’s nine rate-setting board members voted in favor of the decision.

BOJ member Naoki Tamura was the sole dissenter, calling for a 25 basis point hike on concerns over rising inflation. 

BOJ Governor Kazuo Ueda is now set to speak at 01:30 ET (06:30 GMT). 

The BOJ said it expects consumer price index inflation to pick up in 2025, amid a virtuous cycle of higher wages and increased private consumption. The effects of recent government subsidies to lower living costs are also expected to wane in the coming year. 

Markets were somewhat split over Thursday’s decision, with some analysts forecasting a 25 basis point hike amid recent signs of rising inflation in Japan. But economic activity in the country has softened this year, as strong private consumption was largely offset by dwindling business spending. 

Increased political uncertainty in Japan also likely drove Thursday’s hold, with the BOJ expected to face some resistance from the government towards raising interest rates further. 

Thursday’s hold comes after the BOJ hiked rates twice in 2024, bringing an end to nearly a decade of ultra-loose monetary policy. The move was driven chiefly by Japanese labor unions negotiating a bumper increase in wages- a trend that is expected to happen again in 2025. 

Analysts forecasting a December hold said the central bank was still likely to raise rates further in the coming months, with a hike coming as soon as January or March. Wage negotiations in spring will be a key point of focus for the central bank. 

SEOUL (Reuters) - South Korea's potential economic growth rate is estimated to have fallen to around 2% and is projected to fall further below 1% by the late 2040s due to a lack of innovation and inefficient resource allocation, the central bank said on Thursday.

The Bank of Korea (BOK) estimated in an analysis that the potential growth rate, the maximum growth an economy can achieve in a year without triggering inflationary pressure, was around 2% from 2024 to 2026.

The rate has been falling in trend, from the lower 5% range in the early 2000s to the mid-to-lower 3% range in the 2010s and to mid-2% levels by 2020, the BOK said, citing lack of innovation and inefficiency in resource allocation.

In the long-term, the rate is projected to fall to the mid-to-lower 1% range in the 2030s and to around 0.6% by the late 2040s, according to the report.

"But, the abovementioned result is not a given condition and can differ greatly depending on how we respond through structural reforms," the BOK said.

Major reforms that could boost the economy's potential growth include building an ecosystem for innovation, balanced developments between the capital area and other regions of the country, and work-life balance policies, the bank said.

Investing.com-- U.S. stock index futures steadied on Wednesday evening after a sharp fall on Wall Street as the Federal Reserve lowered interest rates as expected but indicated a slower pace of easing in 2025.

Federal Reserve officials lowered interest rates for the third time in a row on Wednesday but projected fewer cuts in 2025 amid sticky inflation and resilient economic growth.

S&P 500 Futures were largely unchanged at 5,941.0 points, while Nasdaq 100 Futures inched lower to 21,475.25 points by 19:18 ET (00:18 GMT). Dow Jones Futures were marginally higher at 42,827.0 points.

Fed officials project only two more cuts in 2025

The Fed cut interest rates by 25 basis points at the end of its two-day meeting on Wednesday, bringing down the borrowing rate to a range of 4.25%-4.50%.

Chair Jerome Powell emphasized that further reductions depend on progress in curbing persistent inflation, reflecting policymakers' adjustments to potential economic shifts under the incoming Donald Trump administration.

Policymakers now see the benchmark rate falling to 3.9% for next year, suggesting just two 25 bps rate cuts, compared with a prior forecast in September for four cuts.

The Federal Open Market Committee (FOMC) economic projections showed that inflation was still a long way from its 2% target, with the targeted metric expected to end this year at 2.4% and at 2.5% next year.

It also showed that policymakers now expect slightly higher economic growth and lower unemployment next year compared to their projections three months ago.

Wall St slumps with tech logging heavy losses

The prospect of interest rates remaining higher for longer than expected sent Wall Street indexes sharply lower on Wednesday, with heavy losses in the technology sector. Investors also locked-in recent profits in tech stocks, after they rallied sharply over the past week.

Market darling NVIDIA Corporation (NASDAQ:NVDA) fell more than 1%, sinking deeper into correction territory following a 10% plunge from its recent peak.

Tesla Inc (NASDAQ:TSLA) slumped more than 8%, and Intel Corporation (NASDAQ:INTC) lost nearly 6%, while Broadcom Inc (NASDAQ:AVGO) shares plunged 7% on Wednesday.

In the aftermarket trade, Micron Technology Inc (NASDAQ:MU) shares plunged nearly 16% after the company issued a revenue outlook that came in below analysts’ expectations.

The S&P 500 declined 3% to 5,872.16 points, while the NASDAQ Composite fell 3.6% to 19,380.87 points.

The Dow Jones Industrial Average fell 2.6% to 42,326.87 points, its 10th consecutive session of declines, marking its longest losing streak since 1974.

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) -Futures on the federal funds rate, which measure the cost of unsecured overnight loans between banks, priced in on Wednesday that the Federal Reserve will hold the overnight benchmark rate steady in January, after it lowered rates by 25 basis points at the end of its two-day meeting.

Rate futures also factored in about 33 bps in cuts in 2025, down from 49 bps immediately after the Fed statement, LSEG calculations showed.

The Fed on Wednesday also released new estimates on rate forecasts, also known as the "dot plot", which called for two quarter-point rate cuts next year. That mirrored what the futures market has been showing over the last two weeks.

The central bank's rate-setting Federal Open Market Committee lowered the benchmark overnight interest rate to the 4.25%-4.50% range, as widely expected. The decision, however, was opposed by Cleveland Fed President Beth Hammack, who preferred to leave the policy rate unchanged.

The Fed noted that the unemployment rate "remains low" and inflation "remains somewhat elevated." Slower progress on inflation, which is not seen returning to the 2% target until 2027, translates into a slower pace of rate cuts and a marginally higher terminal rate of 3.1%, also to be hit in 2027, versus the prior rate of 2.9% seen as of September.

"The Summary of Economic Projections is markedly hawkish, with only two projected rate cuts for 2025, signaling deeper concerns over persistent or re-igniting inflation," said Dan Siluk, portfolio manager and head of global short duration & liquidity and Portfolio Manager at Janus Henderson Investors, in emailed comments.

"The Fed seems to have switched back to prioritizing inflation risks over unemployment, readying for a January skip and potentially an extended pause in 2025, if inflationary pressures persist and the economy remains robust."

LONDON (Reuters) -British inflation rose to its highest in eight months in November but an underlying measure of price growth watched closely by the Bank of England held steady, offering the central bank a little bit of relief.

Consumer prices rose by an annual 2.6% in November, up from an increase of 2.3% in October and moving further away from September's 1.7% rise - the first time in almost three and a half years that inflation fell below the BoE's 2% target.

The inflation rate was the highest since March and in line with economists' expectations in a Reuters poll.

The increase in the rate was broad-based but most prominent for transport - particularly petrol and car purchase costs - and was only partly offset by smaller rises in air fares and the cost of eating out.

"Another consecutive monthly rise in inflation, reaching its highest level since March, underscores the persistent price pressures within the UK economy," Martin Sartorius, principal economist at the Confederation of British Industry, said.

The BoE is worried about persistently strong wage growth while the new government's tax increase for employers is expected to filter through into higher prices after it is introduced in April.

Some economists have predicted headline consumer price inflation is likely to hit 3% in 2025.

The BoE - which is expected to keep interest rates on hold on Thursday after its December meeting - predicted consumer price inflation in November would be 2.4% when it published a set of projections six weeks ago.

BEIJING (Reuters) -Joblessness among the youth in Chinese cities eased for a third straight month in November after reaching its highest this year in August, official data showed on Wednesday.

The urban jobless rate for 16-to-24-year-olds, excluding students, fell to 16.1% from 17.1% in October, according to data from the National Bureau of Statistics.

The unemployment rate for 25-29-year-olds also dropped, falling slightly to 6.7% from 6.8%, while the jobless rate for 30-59-year-olds was unchanged at 3.8%.

The nationwide jobless rate was at 5% in November, according to data released by the statistics bureau on Monday.

China stopped reporting the data for youth joblessness for months after the unemployment rate for 16-24-year-olds hit a record 21.3% in June last year.

The National Bureau of Statistics resumed publishing the closely watched benchmark in December 2023 after changing the methodology to exclude students.

The jobless rate also does not account for job seekers who have given up on job searches, and does not assess the unemployment situation in rural China.

China's economic recovery has stuttered this year amid weak domestic demand and a prolonged property crisis, although some officials are expecting the economy to achieve its 2024 growth target of around 5%.

The government has announced a wave of stimulus measures to buttress the economy ahead of more external headwinds expected from a second Trump administration in the United States next year.

Chinese government advisers have also recommended that Beijing should maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of expected Trump tariff hikes on the country's exports.

By Jihoon Lee

SEOUL (Reuters) - South Korean Foreign Minister Cho Tae-yul said on Wednesday that President Yoon Suk Yeol's short-lived bid to impose martial law had created some limitations communicating with the team of U.S. President-elect Donald Trump and undercut both sides' political momentum.

At a rare joint news conference for foreign media, Cho and Finance Minister Choi Sang-mok sought to reassure Seoul's allies and calm market jitters since the martial law attempt that shocked the nation and triggered the biggest political crisis in decades.

Cho said Seoul had built a network and communication channels with Trump's campaign that were "stronger than those of any other country", but the martial law order undermined "the political momentum" between the two sides.

"It is true that there have been some disruptions with communication over the past two weeks due to this situation," Cho said.

Investing.com-- U.S. stock index futures edged lower on Tuesday evening following a negative session on Wall Street, as caution grew before the Federal Reserve's final interest rate decision for the year.

Markets have fully priced in a 25 basis point cut at the end of a Fed meeting on Wednesday, while the focus will be on long-term rate outlook signals. The Fed is expected to adopt a slower rate cut path after lowering rates in December.

S&P 500 Futures inched 0.1% lower to 6,119.0 points, while Nasdaq 100 Futures fell 0.3% to 22,252.25 points by 18:40 ET (23:38 GMT). 

Dow Jones Futures were largely steady at 43,964.0 points, after the index recorded its longest losing streak since 1978 on Tuesday.

Fed set to cut rates, markets assess retail sales data

Market focus will be squarely on the Fed’s economic projections for the next year, and comments from Chair Jerome Powell. 

This could help investors gauge the Fed’s long-term rate outlook, at a time when inflation has remained stubborn and is expected to rise further under upcoming President Donald Trump.

Investors expect the Fed to indicate a slower pace of rate cuts in 2025, as persistent inflation and a strong labor market—two key challenges for the Fed—continue to pose concerns.

Earlier in the day, data showed that retail sales rose by 0.7% in November, above the 0.5% forecast. 

Stronger-than-expected retail sales data signals that the economy remains strong and consumer spending remains robust, despite challenges like inflation and high interest rates. 

This strength was driven by a solid labor market and steady household finances.

Tech drags Wall St, Dow falls for ninth straight session

Wall Street indexes retreated on Tuesday with the tech sector giving away some of its recent gains, as investors exercised caution ahead of the rate decision.

NVIDIA Corporation (NASDAQ:NVDA) dropped 1.2%, while Alphabet (NASDAQ:GOOG) fell 0.5%

The S&P 500 fell 0.4% to 6050.61 points, while the NASDAQ Composite lost 0.3% to 20,108.30 points. The Dow Jones Industrial Average closed 0.6% lower at 43,449.90 points.

The Nasdaq reached a record high on Monday, and the S&P 500 is sitting on hefty gains this year, but the Dow has faced challenges, marking its ninth consecutive daily decline on Tuesday — the longest losing streak since February 1978. 

A combination of U.S. fiscal expansion, potential tax cuts, and a healthy economy is likely to push Treasury yields higher, with T. Rowe Price projecting yields could even reach 6%.

In its latest note, the investment manager suggests that a 5% 10-year Treasury yield could be reached as early as the first quarter of 2025, after which a move toward 6% is possible.

"Is a 6% 10‑year Treasury yield possible? Why not? But we can consider that when we move through 5%," wrote Arif Husain, T. Rowe Price’s Head of Fixed Income, in the note.

The 10-year Treasury yield, which last touched 6% in 2000, stood at about 4.4% on Tuesday.

Husain also suggested that the current transition period in the U.S. politics is an opportunity to position for rising longer‑term Treasury yields and a steeper yield curve. Between the U.S. election and

the presidential inauguration, markets are now in a “calm before the storm.” 

He further noted that the decreasing foreign demand for U.S. Treasuries could add upward pressure on yields, and potential tariffs and immigration policies would likely be inflationary.

The Fed appears to have guided the economy into an elusive soft landing with little chance of a recession on the horizon, especially if the expected post election pent‑up demand scenario plays out, he added. 

The Fed is set to announce its rate decision on Wednesday, with a widely expected 25 basis point cut to 4.25%-4.5% at its final policy meeting of the year.