원화가격, 23개월째 강세...경제 회복에 걸림돌 되나?<br /><br />Our next story is on the continuous appreciation of Korean currency against US dollar and its implications for the South Korean economy.<br />For more on this, we turn to Lee Kyung-min from the Korea Times who is on the line for us.<br />Good morning Kyung-min, how did the Korean won perform last week?<br />The local currency won has been strengthening rapidly over the past few weeks, hitting a 23-month high.<br />The currency closed at 1114.80 won against the dollar last Thursday, down 4.8 won from the previous session.<br />But it was largely considered a breather following a 50 won increase over the past month.<br />The soaring won is attributable mostly to the weakening of the U.S. dollar after the Biden administration is set to inject a massive stimulus package of over $2.2 trillion during his term.<br />The clear expansionary-leaning stance will be maintained or amplified further due to the bleaker prospects of a global economic recovery, a key driver of the dollar losing value.<br />Other factors also making the U.S. currency cheaper include diminishing global economic uncertainties, including those surrounding the U.S. presidential election.<br />A drop in uncertainty in the market means a corresponding decrease in investors’ risk appetite.<br />The U.S. dollar and gold are among the key “safe-haven” alternative investment vehicles compared to equity market investment.<br />The Korean won is gaining ground against key global reserve currencies, including the Japanese yen, and the euro over the past few months.<br />It has been moving largely in sync with the Chinese yuan.<br />Ever since the won hit an 18-month high of 1,130 a few weeks ago, market watchers have been saying that it could drop further to 1,100 won to the dollar.<br />Now Kyung-min, what does this signal for the Korean economy?<br />The soaring won bodes ill for local export firms, especially since Korea is an export-reliant economy.<br />Korea is highly vulnerable to the performance of the global economy.<br />If the local currency continues to appreciate, it will hurt their competitive edge in the global market.<br />This is highly worrisome, because the poorer-than-expected performance of local export firms will tighten domestic consumption.<br />The prospect of a much-awaited economic recovery will become more elusive.<br />Korea’s top growth driver industries, such as manufacturers of chips and displays as well as automakers, are becoming increasingly unsettled by the local currency hitting new highs.<br />This is because their earnings in dollars converted to Korean won will lead to substantial losses.<br />But other big industries such as steelmakers and petrochemical firms will see a limited impact.<br />That is because a stronger won can help them reduce purchase costs of raw materials, while final products will be sold at higher-than-usual prices.<br />But it spells more significant problems for SMEs, which account for 99 percent of the firms here.<br />Unlike large conglomerates that have a variety of measures to hedge currency risks, SMEs without such
