Stronger won hammers exporters’ profits in Q3

Korean exporters saw their profitability drop in the third quarter of this year due mainly to the strengthening local currency, a report said yesterday.

According to the report by the Korea International Trade Association (KITA), an index that gauges the profitability of local exporters stood at 92.9 for the July-September period, down 1.3 percent from the 94.1 recorded a year earlier.

The third-quarter index also fell from the 94.9 posted the previous quarter. The index shows how much an exporter earns by selling one unit of product. The association set 2010 as the base year with the index set at 100.

“A stronger won hurt Korean exporters’ profitability,” said KITA in a statement. “The government and companies should roll up their sleeves to hedge against the currency risk.”

The local currency has gained more than 4 percent to the U.S. dollar so far this year on the back of quantitative easing measures by major central banks including the U.S. Federal Reserve, and its relatively strong fundamentals.

Korea’s growth, however, is slowing due to weak exports and sluggish domestic demand. The local economy is expected to grow 2.4 percent on-year for 2012, while exports are forecast to expand 3.4 percent, the central bank said.

Yonhap