arirang news

Strong Korean won poses threat to domestic economy Updated: 2014-05-08 22:49:28 KST

  Strong Korean won poses threat to domestic economy

The Korean won continues to hover around its highest level in nearly six years, currently trading at the 1,20 level against the U.S. dollar.
Last month, the local currency strengthened more than 3 percent against the greenback, the biggest appreciation among the world's 40 major currencies.
While experts predict the Korean won to remain strong for the time being with the nation's current account balance remaining in the black for a prolonged period of time, they believe that the impact on local exporters will be limited.

"I don't think it will have that big impact but I do want to remind people that during normal times Korean won was always around a thousand won per dollar. Just before the Asian financial crisis it was in the high 900s and right before the global financial crisis it was around 1,000. It may be that the period we had for the last four years was sort of the abnormal period and we're just getting back to normality."

Experts say what's really worrying are the small- and medium-sized companies that are not fully prepared for the changes in exchange rates.

"The government -- for the small and medium sized companies -- they instituted things like exchange rate insurance. Now two problems, one it's not widely known as it should be among small and medium sized enterprises so they don't take advantage of it. And then the second problem is the amount that they set aside for. It may not be enough to cover a lot of the SMEs so that program and other programs designed to hedge against exchange rate changes should be made larger and it should be advertised more."

With concerns lingering that the economic growth could be hurt by slowing private consumption due to the Sewol-ho ferry disaster coupled with the strong local currency, the government has announced it will hold an emergency meeting led by President Park Geun-hye on Friday.
Hwang Ji-hye, Arirang News.
KOGL : Korea Open Government License
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