Export price drops amid weakening dollar

15-Feb-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The nation’s export price declined slightly in January from the previous month, as the won gained ground against the US dollar, the Bank of Korea (BOK) said Friday. According to the central bank, the index came in at 96.59 last month, down 0.8 percent from a month earlier.

Export prices bounced back in December for the first time in four months on the strengthening dollar against the won. However the momentum failed to last until January, as export prices for the nation’s major hardware products, such as DRAM memory chips and electronic optics products, declined due to exchange rate fluctuations, according to the BOK.

“Hit by the fall in the won-dollar exchange rate, the export price returned to a decline in January,” an official from the central bank said. “The export price drop in such items as computers, electronics and optical products drove down the overall index.”

The average exchange rate came in at 1,164.28 won per US dollar in January, down 1 percent from 1,175.84 won the previous month.

The drop in the export price means local firms’ profitability weakened during the period when they exported their products. The BOK set the export price at 100, which was the annual average in 2015.

Specifically, export price of DRAM chips dropped by 2.5 percent in January from a month prior.

Of the nation’s total exports, the semiconductor industry accounts for the largest portion. In 2019, chip exports accounted for 17.3 percent of total annual exports. The industry has stood at the top for seven consecutive years since 2013.

The import price also dropped by 0.8 percent in January, compared to a month ago, according to the BOK. The figure came in at 107.95. The central bank said this was attributable to the decline in the international oil prices.

The figures were compiled by analysing prices of 209 export items and 229 import items, the BOK said.

The spread of the coronavirus has had limited impact on the indices, as the first confirmed case of the virus was reported in late January here, the BOK official noted.

“We need to wait and see what kind of impact the virus will have on export and import prices in February,” said the official.

Local securities companies also said the spread of the coronavirus would not pose a significant impact on the local export.

“According to data by the Ministry of Trade, Industry and Energy, the nation’s export to China’s city of Wuhan ? the centre of the virus outbreak ? accounted for only 0.3 percent in 2018,” Hana Financial Investment analyst Kim Kyung-min said.

Yet virus-related issues will delay the timing of the potential rebound in chip exports, according to the analyst.

“Earlier, the securities firm expected the rebound to begin as early as February, but we need to tone down the stance due to the outbreak of the virus,” said the analyst.



Category: Korea

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