Price competitiveness of S. Korean exporters hits 6-year low

SEOUL/SEJONG, Oct. 19 (Yonhap) -- The price competitiveness of South Korean exporters has fallen to a six-year low mainly due to the strength of the currency, trade and financial sector data showed Monday. While the currency value of many leading trading nations has fallen as a result of quantitative easing, the Korean won has for the most part remained unchanged over the past five to six years, according to the data by a trade promotion agency and local securities firms. "This has caused the country's price competitiveness to fall to the lowest level since 2010," the Korea Trade-Investment Promotion Agency (KOTRA) said. According to KOTRA, the price competitiveness of locally made goods stood at 45.4 in the third quarter, the lowest reached after the July-September period of 2009. While the number improved to 53.6 in the second quarter of 2011, it has been sliding afterward and hasn't exceeded the 50-point mark since the third quarter of 2014, it added. On a 1-100 scale, a reading under the break-even 50 means a country is suffering from price competitive issues. Similarly data compiled by investment and securities firms showed that the won-U.S. dollar exchange rate stood at 100.7 in the third quarter of the year, almost unchanged from its base rate of 100 in January of 2010. In comparison, the Japanese yen's value via-a-vis the greenback fell from 100 to 137.2 during the same period, while the euro slid to 126.1. Of the 10 countries checked, seven saw their global price competitiveness gather ground, while countries like China suffered setbacks as their currencies appreciated on the global market. Reflecting this, exports of Asia's fourth-largest economy contracted 6.6 percent on-year in the nine months of this year to US$396.9 billion from $425 billion a year earlier. "There has been a scramble by governments to depreciate their currencies," said Jeong Yong-taek, a senior analyst at IBK Securities Co. "Under such circumstances, the market is watching what actions will be taken." Market watchers said that while there has been some hope of the won's depreciation, these expectations have lost steam. "The won-dollar exchange rate is being determined by external factors like the concerns that the U.S. may hike up its interest rates," said Oh Seung-hoon, a researcher at Daishin Securities. "Rate hike worries are fueling the devaluation of emerging market currencies." Such developments have directly impacted stock prices of carmakers, who are feeling the pinch of a stronger won, and large firms listed on the benchmark Korea Composite Stock Price Index (KOSPI), they added. Larger firms are usually more export-oriented, with their businesses centered on the manufacturing sector. Large firms listed on the KOSPI fell an average 0.23 percent Friday, while medium-sized and small companies advanced 0.11 percent and 0.20 percent, respectively. yonngong@yna.co.kr (END)