Trade Deficit in January to Be 1 Billion Dollars

With the weakest yen value yet on the 23rd in 3 years and 3 months, Korea is likely to face a trade deficit in January.

The Ministry of Finance and Economy (MFE) tentatively estimated the trade balance of January until the 22nd to have a deficit of 1 billion dollars, and U.S. Salomon Smith Barney (SSB) prospected, "Korea will go into the red in trade balance of January by 200 million dollars."

The yen-dollar exchange rate in Tokyo foreign exchange market rose to 134 yen for a while on the 23rd (yen devalued). The exchange rate closed at 133.90 yen rising by 0.09 yen from yesterday. The yen-dollar exchange rate had risen to 135 yen in October 1998, and then fell to 110 yen.

The rising yen-dollar exchange rate was somewhat depressed after U.S. Finance Minister Paul O`Neill took back his words, which could be understood as acceptance of weak yen, by saying, "The exchange rate of yen should be decided in the market." Minister Paul O`Neill criticized the Japanese government saying, "I just meant that Japan could not solve the fall in productivity and insolvent bonds in bank circles by decreasing the yen value, but the Japanese government opened the content of the closed meeting, causing misunderstanding."

Lee Eung-Paek, the head of foreign exchange market team of the Bank of Korea, said, "The Japanese government should mobilize the funds required for restructuring in order to solve the problem of banks and enterprises that are causing the currency to increase. Hence, the decrease of yen value is inevitable, and the yen will continue to be weak for the time being."

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