"South Korean companies are in a state of emergency," Yonhap News Agency reported on the 23rd that as the conflict between Russia and Ukraine continued, international crude oil and raw material prices soared, and the exchange rate of the Korean won against the U.S. dollar soared. Seriously concerned.According to a report by South Korea’s KBS TV on the 23rd, the exchange rate of the Korean won against the U.S. dollar reached 1300:1 on the 23rd, which was 2009. New low since mid-July.Powell's remarks further strengthened the preference for safe assets in South Korea's foreign exchange and capital markets, and the stock market was obviously under pressure.On the 23rd, South Korea's KOSPI index closed down 1.22% at 2314.32 points.
Trade balance or current deficit this year
Yonhap News Agency said that the high exchange rate will lead to a drop in the price of export commodities denominated in US dollars, so it is good for South Korean export companies.However, as the price of imported raw materials intensifies, the burden of raw material costs for domestic manufacturers in South Korea will further increase.In the case of South Korea's refining industry, which has issued a large number of dollar bonds, this trend will weigh heavily.At the same time, the formula that usually favors exporting companies with a rising exchange rate may no longer work.Generally speaking, when the exchange rate rises and the Korean won depreciates, the price competitiveness of South Korean export products increases, and automobiles, shipbuilding, and home appliances can become “cheaper” in the short term due to the depreciation of the Korean won.However, at present, the cost of imported raw materials is soaring too fast, and the profitability of the above-mentioned enterprises may decline instead.Some analysts believe that for the semiconductor industry, which is the main export industry, the depreciation of the Korean won will lead to an increase in the cost of imported equipment and raw materials.
South Korea's trade balance in 2022 will turn into a deficit for the first time since 1996.Yonhap News Agency reported on the 21st that the Institute of International Trade and Commerce, a subsidiary of the Korea International Trade Association, predicted that South Korea’s trade balance this year will turn from a surplus to a deficit after 14 years, and the deficit will hit a new high since 1996.Although South Korea's exports are expected to increase by 9.2% year-on-year to US$703.9 billion this year, breaking through US$700 billion for the first time in history.But imports are also expected to surge 16.8 percent to $718.5 billion over the same period.The resulting trade deficit of US$14.7 billion is not only higher than the US$13.26741 billion recorded in 2008 when the financial crisis broke out, but would also be the highest since 1996 (US$20.6 billion).The main reason is that the export of some industries is sluggish and the international oil price is rising.
Financial market jitters grow
South Korea's YTN TV reported on the 23rd that anxiety in the South Korean financial market is spreading rapidly.The South Korean financial authorities believe that with the increasing worries about the stagnation of the South Korean economy, the uncertainty of the market is also increasing. The depreciation of the Korean won will bring high prices and rising benchmark interest rates, which will further reduce the activity of enterprises. Therefore, market investors prefer to have The "safety asset" US dollar.To this end, South Korea has further strengthened relevant countermeasures. On the morning of the 23rd, the Korean Financial Services Commission held the second special working group meeting on financial crisis response.
"South Korea's stock index and the won's value both fell, and the financial stress index is worth paying attention to," "Korean National News" reported that South Korea's main financial indicators are plummeting due to the aggressive tightening pace of the central banks of the United States and South Korea and growing fears of economic recession.Concerned voices argue that alarms sounding in financial markets should be heeded.
On the 20th, the South Korean KOSPI index fell below 2400 points again after a lapse of 6 months, and on January 3 this year, the KOSPI also closed at 2988.77 points.The exchange rate of the Korean won against the U.S. dollar has also plummeted all the way. At the beginning of the year, the exchange rate of the Korean won to the U.S. dollar was 1192:1, and the exchange rate of the Korean won to the U.S. dollar fell to 1300:1 on the 23rd.
According to South Korean banks and financial circles, South Korea's financial stress index in May was comparable to the 2008 global financial crisis.South Korea's financial sector is worried that the financial system is facing a crisis, with bonds and debts intertwined.In particular, if the repayment capacity of households and businesses that "borrow and invest" during the COVID-19 pandemic is reduced, the soundness of the relevant financial institutions will also come into question.
Restaurant spending discourages office workers
"There are more and more colleagues who buy bento from convenience stores at noon."According to South Korea's "Asia Daily" report on the 21st, an employee working in a company in Gangnam, Seoul, South Korea said, "Recently, the price of restaurants near the company has skyrocketed, and the price of a bowl of soup and rice has risen to 12,000 won (about 62.4 yuan). The happiness of having a cup of coffee after lunch has also become a luxury. The number of office workers who choose cheap bento is gradually increasing. It is reported that the prices of major daily necessities in South Korea have risen sharply since the beginning of this year. According to the May data released by the Korea Consumer Agency, The average price of a bowl of cold noodles in the Seoul area rose to 10,269 won, and the unit prices of bibimbap, knife-cut noodles, and kimchi soup rose to 9,536 won, 8,269 won, and 7,308 won, respectively, an increase of 200 won to 500 won from the beginning of the year.
According to a report released by the Bank of Korea on the 21st, due to the combined influence of external factors such as energy, global grain price increases and supply chain crisis, South Korean consumer prices may rise by more than 5% this year.
