By Kim Yoo-chul
Staff Reporter
While the country’s trade balance has been in the red for three consecutive months mainly due to the won’s weakness against the greenback amid a bleak outlook for the U.S. economy, export-driven local IT companies are poised to become more competitive in the global markets riding on the latest trend.
The Korean currency has lost more than 6 percent against the greenback since the turn of this year, hitting its lowest since Jan. 18, 2006, when it was quoted at 992.1. On Friday, the U.S. dollar closed at 997.3 won in Seoul.
``We are not very happy with the recent won-dollar rate considering expenses in global outsourcing. However, it’s good for the company to raise sales in global markets,’’ an official from Samsung Electronics told The Korea Times Sunday.
``If the exchange rate loses by 10 won, we expect the won-denominated operating profits to rise by some 300 billion won,’’ the official said, adding that the company had initially forecast the rate to move in the range of 900-925 won this year.
Samsung Electronics reaped 51 trillion won in exports, last year, capitalizing on semiconductor ― its traditional cash-cow ― and mobile phones.
Samsung’s cross-town rival, LG Electronics, also hopes to increase its shipments of strategic flat-screen television sets and high-end handsets in the United States thanks to the ``favorable’’ exchange rate.
``When the won-dollar rate loses by 10 won, then we expect some 70 billion in won-denominated operating profits to rise additionally, though we are concerned about the rising price of imported raw materials,’’ an official from LG Electronics said. The company originally set the won-dollar rate in the range of 885-900 won.
Apart from IT-related sectors, local car manufacturers and shipbuilders have been inspired by the weakening won against the dollar as they will be able to pass the rise in costs onto their customers.
``Because of the unexpected move in the exchange rate, we stand a good chance of boosting our price competitiveness against Japanese cars in the U.S. market,’’ an official from Hyundai-Kia Automotive Group said.
The group, which has also set the won-dollar rate at around 900 won, aims to sell 1.65 million cars for Hyundai Motor and 650,000 cars for Kia Motors.
``While the price rise of raw materials will continue to remain a major concern for shipbuilders, we hope to get additional `gifts’ by winning more value-added contracts from Europe and the U.S.,’’ said an official from Hyundai Heavy Industries, the world’s No. 1 shipbuilder.
But airliners, food makers and oil refiners have been suffering from the won weakness against the greenback as they have to pay more to import raw materials.
``We cannot fully offset increasing costs spurred by soaring oil prices and the won’s value loss. The South Korean government needs to take immediate measures,’’ an official from Korean Air said. The official added the company loses some 22 billion in profits when the won-dollar rate weakens by 10 won.
``If the unfavorable condition continues, we have no other alternative but to pass the burden to consumers,’’ an official from a local food company said.