[EDITORIALS]Won’s rise not good tidingsThe won-dollar rate plunged, and now it seems that the time of a three-digit exchange rate will continue for a while. Yesterday the won gained more than 11 won against the dollar, reaching 987.3 per greenback. That is the won’s strongest level in eight years and two months, meaning the won-dollar rate has returned to the pre-Asian financial crisis level.
Since the government, unlike last year, is not making active efforts to intervene in the currency market, the strengthening won is likely to continue for a while.
There are multiple factors that caused the advance of the won. Dollars are pouring into the local market because of the trade surplus of more than $20 billion last year. Also, the value of the U.S. dollar is dropping throughout the world because the U.S. Federal Reserve Bank recently indicated it may not continue its interest rate hike policy any longer. Aggressive selling by speculative traders in non-deliverable forward markets further fanned the dollar’s slump.
The won-dollar rate is well below the 1025-1059 level, the optimal exchange level for the economy to make profits, according to the Korea International Trade Association. It will be hard for the economy to grow 5 percent if exports, which contribute about 90 percent of our economic growth, begin to stagger. More companies will move their production lines overseas and decrease their transactions payable in U.S. dollars. But in the long term, a strong won is also an opportunity to improve the health of the economy. We have to improve our productivity and develop value-added products and technological skills. That is how Japanese companies have improved their competitiveness.
Domestic companies began the year struggling with the strong won and high oil prices. The head of the Korea Chamber of Commerce and Industry pleaded with the government to make Korea corporate-friendly at a New Year’s meeting on Jan.4. But President Roh Moo-hyun reacted by saying, “in order to reduce the gap between the haves and the have-nots, I need to beg for more favors from local companies.”
Now our companies have one more burden on their shoulders. Under such circumstances, the companies who gained footholds overseas will never be willing to come back here. We are concerned that the factories still here will soon flee, using the won-dollar rate as their excuse.
It is time for us to stop corporation-bashing. Who will save the economy when even our companies lose their dreams and vision?