The South Korean currency appreciated against the yen by breaching the psychologically important level of 1,000 won for the first time in five years
December 30, 2013 Leave a comment
2013-12-30 15:09
S. Korea’s currency breaches 1,000 won level per yen in five years
The South Korean currency appreciated against the yen by breaching the psychologically important level of 1,000 won for the first time in five years on Monday.
The local currency was trading at 1,001.81 per 100 yen as of 2:10 p.m., up 0.19 won from Friday’s close.The won hit 999.67 per 100 yen as soon as the market opened. The greenback serves as the benchmark for the won-yen cross rate.
“We are worried about a sharp drop in the won-yen exchange rates,” a high-ranking finance ministry official told Yonhap on condition of anonymity. “We are closely monitoring the market situations.”
The upward move is the result of Japan’s continued push to inject liquidity into the market in order to stimulate its economy despite the U.S.’ recent decision to reduce its bond-purchasing program.
Since late last year, Japanese Prime Minister Shinzo Abe has preached “Abenomics” — a mixture of aggressive monetary and fiscal policies — to boost economic growth and fight years of deflation. Massive liquidity injection by Japan’s central bank has put heavy downward pressure on the yen.
The won’s rise against the yen is a major cause for concern here as it could result in eroding the price competitiveness of South Korean products in overseas markets where they have to compete with their Japanese rivals.
Exports to Japan, in particular, have been affected. During the January-November period, South Korea’s exports bound for Japan have contracted 10.5 percent from a year earlier, industry data showed.
The government said that it is considering diverse measures aimed at providing support for small and medium-sized exporters, which are vulnerable to such currency fluctuations.
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