Won dollar exchange rate to be 1,350 won to gain export competitiveness

As the yen to shoots upward, Korean corporations may require an exchange rate of at least 1,350 won per dollar to maintain competitiveness with Japanese corporation, suggested one association.

The Korea International Trade Association (KITA) reported that the yen’s depreciation is increasing Japanese exports. According to the survey, domestic export companies reported that most Japanese export companies are lowering export prices, while 36.7%　of companies responded that Japanese companies are cutting prices, and 53.1% of companies said that they are expecting prices to reduce in the future.

Accordingly, most export companies are experiencing difficulties due to the yen’s depreciation. Among the surveyed companies, 15.4% said they are affected little by the yen’s depreciation, 26.8% reported being hugely affected, and 24.4% responded a lot of influence, for a total of 66.6% reporting negative influences. About 20.3% worried about negative effects but are not currently affected.

Export companies said that a desirable currency exchange rate would be about 10.8 won per yen, but if the yen goes below 10.2 won, profitability will be difficult as the won to yen rate would be below the break-even point. An acceptable currency rate based on commodities revealed that for light industry product such as textiles and consumables, 10.9 won per yen would be ideal, however, for heavy industries product, including machinery, cars, steel, electronics, and petrochemical products, a slightly stronger won at around 10.6 - 10.8 won per yen would not seriously hurt exports.

KITA　said that the plummeting yen’s depreciation began to affect the profitability of export companies and export competitiveness. If the won doesn’t move with the yen, an export recovery would be put in question, said the association.

It also added that the won should be set at about 1,350 won to the dollar considering competition with Japanese companies.

It proclaimed that the yen’s depreciation made the export situation difficult, and asked for support to promote exports.

In the meanwhile, the Ministry of Commerce, Industry and Energy and KITA agreed to have a regular meeting in the time being.