The South Korean won weakened against its US counterpart on Tuesday as the country faces the highest level of inflation in about a decade. The won has been one of the worst-performing Asian currencies, falling 9% year-to-date. With the South Korean economy anticipated to slow even more heading into 2022, the won could be in store for additional trouble.

According to Statistics Korea, the annualized inflation rate surged 3.2% in October, up from 2.5% in September. This was also slightly higher than the median estimate of 3.15%. The last time inflation was this high in South Korea was in January 2012.

On a monthly basis, the consumer price index (CPI) rose 0.1%, matching the market forecast.

The upward pressure in inflation was driven by food and industrial products.

Seoul has come to a place of acceptance that hot inflation will be a permanent fixture of the post-pandemic economy. From Bloomberg:

“In a research note last week, central bank officials warned high inflationary pressures may last longer than expected as the impact of supply snags spills over into domestic prices and a shift to “living with Covid” boosts domestic demand.”

In other economic data, the IHS Markit manufacturing purchasing managers’ index (PMI) eased to 50.2 in October, down from 52.4 in September. Anything above 50 indicates expansion.

On the trade front, the trade surplus lowered to $1.69 billion last month, falling short of economists’ expectations of $3.9 billion. Exports climbed 24% year-over-year, while imports swelled at an annualized rate of 37.8%. Both figures were below market estimates.

According to the Bank of Korea (BOK), foreign exchange reserves increased to $469.21 billion in October, up from $463.97 billion in the previous month.

The USD/KRW currency pair climbed 0.47% to 1,178.59, from an opening of 1,174.98. The EUR/KRW rose 0.02% to 1,364.98, from an opening of 1,364.75.