South Korea's currency fell to the lowest level against the U.S. dollar in two months on Wednesday, moving in tandem with major counterparts' descent against the greenback on rising speculation that the U.S. Federal Reserve will hike borrowing costs, analysts said.

The Korean won was changing hands at 1,107.30 per dollar as of 1:37 p.m., down 6.3 won from the previous session's close.

The local currency's drop came as the U.S. dollar has spiked on data showing that the world's largest economy is on a firm recovery track, which in turn is prodding the U.S. Fed to start its much-awaited rate hike in the second half of the year.

The local currency's drop versus the dollar also came as the Japanese yen dropped to an eight-year low, forcing South Korea's currency authorities to step in to curb the won's sharp rise against the yen, they said.

South Korean exporters and their Japanese rivals compete in overseas markets over products ranging from autos and ships to electronic goods, which means that a weak Japanese currency poses a threat to South Korean firms.

"The rise in the dollar-yen rate would spur a rise in the won-dollar rate," said Jun Seung-ji, an analyst at Samsung Futures Co. "But its rise may be limited due to end-month dollar selling by local exporters."

The won-yen arbitrated rate stood at 899.23 per 100 yen as of 1:37 p.m., hitting a seven-year high.

Earlier this week, Bank of Korea Gov. Lee Ju-yeol expressed worries over the country's sluggish exports, saying that they are unlikely to rebound for the time being due to slowing growth in China and a weakening yen.

The country's overall outbound shipments came to $46.22 billion last month, down 8.1 percent from the same month last year, according to the Ministry of Trade, Industry and Energy. (Yonhap)