The Japanese yen has declined by the most against the Korean currency this month in three years, adding to fear it will hurt the export-oriented local economy down the road, data showed Sunday.
In the month to May 13, the local currency exchanged hands at 1,103.20 won per 100 yen, appreciating 24 percent from an average of 1,451.49 won a year earlier, according to the data compiled by the Bank of Korea and local brokerage houses.
That marks the biggest fall in the Japanese currency to the won since 2000, the data showed. The yen weakened 17.93 percent to the won in April, 14.78 percent in March and 18.52 percent in February.
The yen has extended its losing streak since September last year, after Japanese Prime Minister Shinzo Abe kicked off an aggressive monetary easing drive in a bid to stimulate the economy.
That caused the won to gain sharply against the yen, breaching the 1,100 won mark for the first time in nearly five years, the data showed.
A weaker yen comes as a major drag on the export-driven local economy as it makes Korean products relatively more expensive compared with those produced by Japanese rivals. The South Korean government has thus been paying close attention to the won-yen exchange rate movement, bracing for a possible sudden currency fluctuation.
Most analysts had predicted earlier that the yen’s descent will slow this year, but there have been growing concerns it may not follow that scenario, as the weakening pace of the yen seems to be expanding further.
“The current pace of the yen’s fall may slash Korea’s exports to a single-digit growth rate for this year,” said Moon Jeong-hee, an analyst at KB Investment & Securities Co.
The fear of the depreciating yen has cast a dim outlook on Korean firms’ corporate earnings, starting from the second quarter.
“We need to draw up measures that will improve competitiveness of our export products that vie with Japanese ones and shore up stability in the foreign exchange market, but there aren’t that many choices available for us to make at the moment,” said Shin Min-young, an economist at LG Economic Research Institute. (Yonhap News)
