SEJONG, May 14 (Yonhap) -- South Korea's trade minister on Wednesday vowed to keep a close watch on the local currency's appreciation against the U.S. dollar that is eating into the profitability of exporting companies, but also urged the companies to make strong restructuring efforts.
In a special meeting convened to check conditions in the exports market, Yoon Sang-jick said the won's ascent against the U.S. greenback may provide an opportunity for the companies to improve their competitiveness in the long term.
"The government and private companies must work together to take this difficult condition and turn it into a chance to cut the companies' costs and improve the quality of their products as a way of strengthening the fundamental competitiveness of our economy," the minister of trade, industry and energy said.
The meeting involved officials from business organizations, including the Korea International Trade Association (KITA), and representatives from key industries.
The average exchange rate of the South Korean won in the first eight days of this month came to 1,029.7 won to the dollar, up 6 percent from 1,095.0 won for the same period last year. The won closed at 1,022.10 on Tuesday.
Such an appreciation was hurting the profitability of local exporters, whose break-even exchange rate was estimated at 1,045.0 won against the dollar in a recent survey by KITA.
Out of 340 exporting companies surveyed, 60.3 percent said their profitability has already worsened though the won's appreciation has yet to take a toll on the volume of their outbound shipments. Nearly one third or 28.2 percent answered both their profitability and export volume have been undermined.
"The government will continue to do its utmost to help minimize damage from currency rate fluctuations, but the companies, too, must be fully aware of the importance and risks of currency rates," Yoon was quoted as saying at the meeting.
Wednesday's meeting also sought ways to boost the country's exports to China, the world's largest importer of South Korean products.
The ministry said the growth of shipments to China has been slowing down for four consecutive quarters. Exports to the country grew 2.9 percent on-year to US$46.9 billion in the first four months of this year.
Such a slowdown was mostly attributed to a dip in China's own exports.
"Exports to China are expected to slowly recover in the second half of the year as China's own exports and domestic consumption will pick up on a recovery of the global economy," it said.
In the January-March period, South Korea shipped $21.9 billion worth of industrial parts and materials to China, accounting for over one third of its total exports of $64.88 billion in the sector, partly showing South Korea's heavy dependence on the Asian neighbor.