ROK Drop

Avatar of GI KoreaBy on February 5th, 2013 at 7:15 am

Rising Won Could Slow Korean Economy

It will be interesting to see over the next year what effect the rising won will have on the Korean economy:

A SURGING won and waning yen are eroding the bottom lines of South Korea’s export powerhouses, which are feeling the pinch after years of gobbling up global market share from their Japanese rivals.

The South Korean currency has soared 27 per cent 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 per cent against the US dollar over the same period, touching a 17-month high of 1,054.49 on January 15.

In contrast, the yen slumped last 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. [Business Times]

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4
  • John in NY
    6:55 am on February 5th, 2013 1

    Keep up with the Joneses and Kitamuras and start QE in Korea!

  • Flunky Brewster
    3:19 pm on February 5th, 2013 2

    Too often the Korean media reports economic news in overly simplistic terms and this is one of those cases. 30 years ago the Korean economy was much easier to analyze with just some large corporations and many workers, but now there’s a rising middle and upper class of consumers that is often ignored when addressing economic news like the rising won. The rising won is good for those who have some buying power in Korea. Plus it is good news for most consumers who can buy more with their won.
    So, it’s not all bad news when the won rises in value. There are Koreans who benefit from the rising won. You have a middle and upper consumer class that benefits by having cheaper imported goods available to them, and that also benefits stores that sell imported goods, which includes Homeplus, E-mart, and Costco. Plus, Koreans can travel overseas and get more for their won. Also, those who wire money from Korea to other countries will get more money for their won.
    So a rising won is not all bad.

  • tbonetylr
    4:39 pm on February 5th, 2013 3

    “And the won gained 8.6 per cent against the US dollar over the same period, touching a 17-month high of 1,054.49 on January 15.”

    What a worthless article. It was written on Feb. 6th and talks about Jan. 15th. Since then what has the Won done? Well, it’s now at 1086.87 South Korean Won.

    This tells the story very well -
    “Won Anxiety Becomes Absurd; Flips Direction From 2008″
    http://blogs.wsj.com/korearealtime/2013/01/30/won-anxiety-becomes-absurd-flips-direction-from-2008/?mod=WSJBlog

  • Onezime
    5:03 pm on February 5th, 2013 4

    “Too often the Korean media reports economic news in overly simplistic terms and this is one of those cases.”

    You can say that again. Back in ’98 it was “IMF this” and “IMF that”. No mention of the corrupt banking and accounting which led to the crisis or the fact that the government made things worse by refusing the IMF’s initial offer in order to save face and create a scapegoat.

 

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