The South Korean won leaped against the U.S. dollar Thursday afternoon as the U.S. Federal Reserve hinted at raising borrowing costs at a slower pace than forecast.

The local currency was quoted at 1,114.90 per dollar as of 1:20 p.m., up 15 won from the previous session's end.

On Wednesday, the Fed left room for a rate increase this year by dropping the word "patient" from its formal statement released after its two-day policy review meeting.

But Fed Chair Janet Yellen said the growth in the world's largest economy is still weak despite recent sound data on job creation, signaling that any mid-year rate increase would not be earlier than what market players have been expecting.

"The dollar may face severe volatility ending its one-way direction," said Jun Seung-ji, an analyst at Samsung Futures Co.

"But the won-dollar rate would fall sharply as a mid-year rate hike is still valid."

The won has been under selling pressure on expectations that the Fed would raise the key rate earlier than anticipated while central banks of other major and emerging economies are moving to cut it to ward off deflation and boost sagging economic growth.

Last week, the Bank of Korea, the country's central bank, slashed its policy rate by a quarter percentage point to an all-time low of 1.75 percent, expressing concerns that the growth pace of Asia's fourth-largest economy is slower than expected. (Yonhap)