Payments in Won
According to a survey done on 199 import/export companies by the Institute for International Trade (IIT) at the Korea International Trade Association on Oct. 12, only 6.0 percent of responding companies are currently paying in won, but 14.1 percent are willing to do so within three years.
The main reasons are to minimize foreign exchange commissions and foreign exchange risks (43.6 percent), and to enhance bargaining power (43.6 percent). In fact, more and more Korean companies are using won in international trades. In 1995, only 0.2 percent of international transactions were paid in won, but this number increased to 1.1 percent in 2005, 1.8 percent in 2010, 2.8 percent last year, and finally 2.9 percent for the first half this year.
However, the proportion of payments in its own currency is very low in Korea compared to Japan (28.5 percent) and China (16.9 percent).
An official at IIT claimed, “Direct cross-currency markets with major trade counter-parties including China, the U.S., Japan, and Europe have to be expanded. Companies that wire transfer money to and from overseas offices or engage in imports and exports with China have to be urged to do won-yuan transactions.”