Small Exporters Distressed
According to the Bank of Korea, the won-euro exchange rate dropped by as much as 37 percent between March 2009 and this month, from 1,904.04 won to 1,202 won per euro. The won-yen exchange rate also slid from 1,013 won to 921 won per 100 yen between March 2014 and this month.
During the past year, the yen and euro depreciated by 13.51 percent and 20.39 percent each against the U.S. dollar, whereas the won depreciated by just 5.71 percent.
The appreciation of the Korean currency is affecting small export businesses in Korea without appropriate exchange risk handling tools. They are trying to tackle the situation by means of market diversification and reduction in long-term U.S. dollar loans, but more and more of them are being driven out of certain overseas markets due to their decreasing price competitiveness.
Nevertheless, they are unwilling to counter the exchange risk, with the KIKO trauma of seven years ago still fresh in businessmen's minds. According to ruling Saenuri Party lawmaker Ryu Seong-gul, only 361 out of 63,999 small export businesses were insured against foreign exchange risks as of last year.