[BUSINESS INSIDER] South Korea is caught between cheap Chinese goods and a plunging Japanese yen

November 24, 2014

 

The South Korean currency continued to strengthen against both the U.S. dollar and the Japanese Yen. (Yonhap)

South Korea’s vast dollar reserves allow the central bank to intervene in the currency market to curb any volatile swings in the won-dollar rate. (Yonhap)

[BUSINESS INSIDER / AFP] SEOUL —  As Japan slips into recession, South Korea is keeping an increasingly wary eye on its export rival’s free-falling currency, which is honing a lasting competitive edge over Korean products in a number of key markets.

The massive fiscal stimulus and flood of easy money unleashed by “Abenomics” has sent the Japanese yen plunging to multi-year lows against a basket of major currencies.

In the past two years, the yen has lost around 33 percent of its value against the US dollar and 35 percent against the Korean won — a depreciation that has triggered public expressions of concern in Seoul from industrialists, politicians and monetary policy-setters.

A weaker yen makes Japanese exports cheaper, which impacts countries such as South Korea that are direct competitors in a number of key sectors. [READ MORE]

 

 

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