FX Rate Change

 

A local economic research institute reported that a 10 percent rise in the value of the Korean won to the US dollar could cause a 3.4 percent drop in the sales of manufactured goods. 

Hyundai Research Institute said on November 30 that the impact of the value fluctuation of the won varied depending on the industry, with the transportation-related sector likely to be hit the hardest, followed by electronics, precision machinery, and general machinery.

Sales of transportation equipment could drop 5.2 percent. The electronics and precision machinery sectors could see 5.0 percent and 4.2 percent down in sales each, while sales in the general machinery sector could plunge 3.6 percent.

The institute predicted that a 10 percent appreciation of the won would pull down import costs by 2.5 percent for manufacturers. The won had appreciated 7.4 percent from January 2012 through October of this year, the steepest gain of major economies. In particular, importers of crude oil or coal could expect a 7 percent drop in costs. 

Meanwhile, operating profits of manufacturers stood at 6.7 percent in 2010, dropping to 5.6 percent in 2011 and 5.1 percent last year.

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