South Korean won losses were witnessed – however minimized – on the last trading day of the year.  The South Korean currency fell to trade at 1,159.45 against the US dollar, down 0.29% for the session.  Causing the decline in the Asian currency were reports that annualized consumer inflation rose more than anticipated in December – decreasing the likelihood that Bank of Korea policymakers will opt for a rate cut at their next meeting in January.

According to Statistics Korea, consumer inflation in South Korea increased to a year on year change of 4.2%.  The figure rises above the 4% market estimate and matches the same result in the month of November.  Core prices additionally rose, increasing to an annualized rate of 3.6%, from last last month’s 3.5%.  Although the jump in yearly inflation is a bit alarming, analysts are pointing to an increase in electricity prices as the main culprit behind the rise in December.  Government officials raised prices at the state owned electric company to compensate for the company’s prolonged quarterly losses.

Nonetheless, the report will likely keep Bank of Korea policymakers steadfast when it comes to current monetary policy.  The country’s central bank kept rates on hold for the sixth straight month in their December 8th decision – currently at 3.25%.

Previous speculation had forecasted a 25 basis point rate cut in the next six months as the government attempts to retain current growth rates of 3-4% amid consumer inflation that is expected to ebb to 2.6% throughout next year.