posted at 00:50
Author Name: Jung Ha-Won
South Korean export muscle sapped by weak yen
The massive fiscal stimulus and flood of easy money unleashed by "Abenomics" has sent the Japanese yen plunging to multi-year lows against a basket of major currencies. In the past two years, the yen has lost around 33 percent of its value against the US dollar and 35 percent against the Korean won - a depreciation that has triggered public expressions of concern in Seoul from industrialists, politicians and monetary policy-setters. A weaker yen makes Japanese exports cheaper, which impacts countries such as South Korea that are direct competitors in a number of key sectors. At its monthly monetary meeting on November 18, the BOK kept its key interest rate unchanged at 2.0 percent, but Lee underlined the "Worrisome situation" regarding the Japanese currency. If Japanese companies up the ante still further by slashing export prices, then South Korean companies in the auto, steel, machinery and shipbuilding sectors are "Bound to suffer", Lee said. The advantage Japanese exports gain from the falling yen makes life particularly difficult for South Korean companies such as Hyundai, the world's fifth largest automaker. Japanese carmakers have hammered home the advantage of the weaker yen by boosting sales incentives to new buyers in the United States. The portfolios of South Korean and Japanese shipbuilders overlap significantly in the merchant ships and liquefied natural gas carrier sector.

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