Currency contingency plans in place

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Currency contingency plans in place

Korea is ready to deal with the local currency’s rapid rise in the event this happens as a result of quantitative easing moves by the United States and Japan, Seoul’s top economic policy maker said yesterday.

“Measures have been prepared,” Finance Minister Bahk Jae-wan told reporters, though he declined to elaborate.

He also vowed to make efforts to ease currency fluctuations, a key factor in Asia’s fourth-largest economy where exports account for about 57 percent of the country’s GDP.

A strong won often spells bad news for Korea’s exporters as it makes their products more expensive in global markets.

The won gained 7.6 percent against the dollar in 2012 and rose 19.6 percent against the Japanese yen over the same period, according to the Bank of Korea. It gained 0.11 percent and 3.52 percent vis-a-vis the dollar and yen this year, respectively.

The U.S. and Japan have embraced quantitative easing to try and boost their economies, steps that could eventually result in the further appreciation of the Korean won.

The outgoing minister said quantitative easing moves could be one of the issues to be discussed at the finance ministers’ meeting of the G-20, a group of the world’s most economically powerful countries, which will be held in Russia next month.

He said Japan’s quantitative easing could give a short-term boost to its economy, but could have mid- and long-term negative side effects.

He also said some Korean industries, which compete against their Japanese rivals, could face difficulties due to the move.

Bahk added that the outgoing government has created 1.25 million jobs over the past five years, he voiced concern such momentum may weaken this year.

The nation’s jobless rate stood at 2.9 percent in December, slightly up from the previous month’s 2.8 percent. The rate has been in the 2-percent range since September, according to Statistics Korea.Yonhap

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