Bank of Korea Warns on Offshore Leverage in Samsung and SK Hynix as Global FX Markets Brace for US CPI and ECB Decision

The Bank of Korea issued a warning about tightening oversight of overseas derivatives tied to Samsung and SK Hynix, citing risks that offshore leverage is feeding back into Korea's domestic equity market. The central bank pointed to hedge funds that built leveraged positions in Korean memory-chip names and then unwound them sharply during July's selloff, amplifying local market swings. One fund was cited as using leverage of up to 4x. Hong Kong-listed leveraged ETFs tracking Samsung and SK Hynix surged more than 20 times in market value during the first half of 2026, and BlackRock's U.S.-listed Korea ETF drew a record $2.8 billion in a single week in July. The BOK warned that Korean banks hedging these products through domestic stocks, futures, and options may be compounding the volatility.

In currency markets, USD/JPY and EUR/JPY are flashing daily oversold signals not seen since 2024, raising the risk of a near-term reversal ahead of the U.S. CPI report and the Federal Reserve's upcoming policy decision. USD/JPY was trading above 153.50 with a bearish bias before briefly extending gains to a session high of 154.08. EUR/USD held around 1.1640 as traders positioned ahead of the European Central Bank's policy decision, while sterling held steady against the euro in the same countdown.

The Indian rupee weakened 0.3% to 95.40 per U.S. dollar, down from Wednesday's close of 95.11, with the Reserve Bank of India's liquidity mop-up operations via FX swaps seen as a channel of support for the currency. Silver fell below $66 per ounce as the U.S. dollar recovered in advance of U.S. PPI data, pulling back from a stretch during which both Ether and silver had been framed as beneficiaries of a broader dollar debasement trade going mainstream.