Exporters to lose profits if won rises more against dollar: poll

SEOUL, Oct. 18 (Yonhap) -- Most exporters will have no profit margins if the
South Korean currency appreciates beyond 1,100 won to the U.S. dollar, a poll
showed Sunday.

The survey conducted by the Korea Chamber of Commerce and Industry (KCCI) on 600
companies nationwide showed 82.8 percent of respondents claiming a rise in the
value of the won beyond this limit can hurt operations.
Such a view is worrisome since it could affect exports, which have helped the
country pull off a faster-than-expected recovery in recent months.
From January through September, the won stood at an average 1,312 won to the
dollar, but it started to gain ground in recent months, with exchange rates
reaching 1,163 won to the dollar at the end of trading Friday.
The overall weakness of the dollar and the sizable trade surplus being posted by
South Korea is fueling the won's gain.
A stronger won makes locally made products more expensive abroad, which can hurt
demand. Large conglomerates can cope better with unfavorable exchange rates
because the goods they make are more value-added. Small- and medium-sized
enterprises are more vulnerable.
The KCCI said that even at current exchange rate, a quarter of the companies
polled said they were already feeling the pressure in a sharp reduction in profit
margins.
It added 83 percent of the companies said the won was appreciating too rapidly
vis-a-vis the dollar, with 65.6 percent saying they do not have a way to cope
with almost no profit margins.
The latest survey, meanwhile, showed machinery, clothing, information technology
and electronics being affected the most by the stronger won, while autos were
less affected.
South Korea's largest private economic organization said 60.8 percent of all
companies urged the government to arrest the appreciation of the won, with 15.2
percent calling for more export-related financial support.
Government policymakers said that while they can conduct so-called smoothing
operations to deal with sudden fluctuations in exchange rates caused by
speculators, it cannot take a more direct role since such a move would violate
international rules.
yonngong@yna.co.kr
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