South Korean fears allayed after Won climbs from three-month low

Business & Finance Featured Korea - February 4th, 2013

South Korea’s won climbed from a three-month low after two of the world’s largest economies showed signs of recovery while the central bank eased intervention concerns.

The South Korean currency gained 0.8% to 1,088.33 per dollar as of 12:34pm in Seoul, according to data gathered by Bloomberg. It had depreciated 3.9% in the past three weeks and touched 1,098.25 on Feb. 1, the weakest level against the greenback since Oct. 26.

The won soared 27% against the yen since the start of 2012, as monetary easing promised by Japan Prime Minister Shinzo Abe weakened the yen across the board, according to AFP. It strengthened 1.3% to 11.74 per yen today.

The surging won and waning yen have raised concerns among South Korea’s export industry after years of fierce competition with Japanese rivals. The two countries compete head-to-head in electronics, auto, shipping and steel sectors, with 50% of their export products now overlapping – up from only 20% in 2000, AFP reports.

“The impact of the weak yen will have a limited impact on IT industries like smartphones where South Korea has a wide lead,” says 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,” he said.

The won gained 8.3% against the dollar in 2012 and touched a 17-month high of 1,054.49 on January 15, prompting South Korean Finance Minister Bahk Jae-Wan to say they would strengthen measures to curb the currency’s appreciation, Bloomberg reports.