Soaring Korean Currency Hits Shipbuilding and
Automobile Sectors
It is reported that shipbuilding and automobile sectors will be most greatly influenced by the rising rate of exchange of the Korean currency to the US dollar, whereas the oil importing and iron and steel sectors will experience a positive influence. According to the Economic Research Institute of the Industrial Bank, that released its analysis under the title of Influence of the Rising Korean Currency on Domestic Industry, it says that the soaring exchange rate can aggravate profit of domestic enterprises and influence a wide range of industrial sectors.
It also analyzed that due to the rising exchange rate, import costs of raw materials and the interest burden of foreign loans will lessen, but export industry sectors will face difficulties because of the rising currency rate, and their range of sales and profits will be aggravated. According to an official from the Bank of Korea, the government has decided to take more time to verify the impact of rising currency rates on the economy and financial markets, and now expects the nation's current account balance to post a deficit for a third straight month in April due to increased dividend payments.
According to the report, if the Korean won falls 10% to 921.9 won, profits of domestic manufacturing sectors will fall by 2.1%. In case of the shipbuilding industry, its business profits may fall 6.3%, which is the worst of all sectors, and profits of the domestic automobile industry and textile industry will decrease by 3.6% and 1.94% respectively.
In particular, the report expects that the shipbuilding industry can minimize its losses by hedging the exchange rate in the short term, but can be badly influenced in the long run. However, if the currency rate rises 10%, profits of the oil industry will increase 3.06%, and the iron and steel industry will rise 0.76%.
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 / 입력시간: 2006. 05.13. 09:30
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