Won-Yen Rate Falls Below 800

The won has risen sharply against the yen over the past five trading days, with the exchange rate falling below 800 won per 100 yen for the first time in eight years and 11 months.

The drop in the exchange rate could compromise the price competitiveness of Korean exports, causing a negative impact on the nation’s export and current account.

At Seoul’s foreign exchange market on Monday, the won-yen exchange rate closed at 798.71 won to 100 yen, down by 1.42 won from last Friday, the previous trading day.

The won-yen exchange rate dipped below the 800 mark for the first time since November 14, 1997, when the exchange rate recorded 784.30.

The exchange rate decreased by 57.39 won (6.7 percent) from last year’s 856.10 and by 9.59 (1.2 percent) from the 808.30 won value from last Monday when North Korea conducted a nuclear test.

LG Economic Research Institute analyst Song Tae-jeong said, “The won remained relatively strong because the U.N. Security Council’s resolution on sanctioning North Korea was not as harsh as expected.”

The strong won against the yen is expected to have a negative impact on Korea’s export earnings and current account.

Since the two countries produce many goods that compete with each other in the global market, the strong won can be a direct threat to the price competitiveness of Korean products in Japan and other overseas markets.

In addition, more Koreans will travel to Japan while the number of Japanese visitors to Korea will shrink due to the exchange rate factor.

Meanwhile, the won-dollar exchange rate closed at 955.5 won against the dollar, up by 0.3 won from last weekend.

jinhup@donga.com