South Korea exporters don't appreciate surging currency
By Jung Hawon, AFP
February 4, 2013, 12:13 pm TWN
SEOUL -- A surging won and waning yen are eroding the bottom lines of South Korea's export powerhouses who are feeling the pinch after years of gobbling up global market share from their Japanese rivals.
The South Korean currency has soared 27 percent against the yen since the beginning of 2012, as anticipation of monetary easing promised by Japan's new leader Shinzo Abe weakened the yen across the board.
And the won gained 8.6 percent against the U.S. dollar over the same period, touching a 17-month high of 1,054.49 on Jan. 15. In contrast, the yen slumped this week to its weakest level against the greenback.
The trend is being watched anxiously in business circles in South Korea, where overseas sales account for nearly half of the country's export-reliant economy.
In the past decade South Korea has made sizeable inroads into Japan's export market where the two countries compete head-to-head in the electronics, auto, shipping and steel product sectors.
While only 20 percent of their top 50 export products overlapped in 2000, the figure now stands at more than 50 percent, according to data from the state-run Korea Trade-Investment Promotion Agency.
"The impact of the weak yen will have a limited impact on IT industries like smartphones where South Korea has a wide lead," said Shin Hyon-soo of the Korea Institute for Industrial Economics and Trade.
"But industries like auto, home appliances and steel, where slight currency swings play a pivotal role, face a pretty tough road ahead from now on," Shin said.
Industry giants like Samsung, the world's biggest technology firm, and the nation's top automaker Hyundai are already feeling the squeeze, as reflected in their recent fourth-quarter earnings reports.