By Park Hyong-ki
The value of the Japanese yen is expected to further weaken against the Korean won as investors are increasingly unloading their yen-denominated assets amid Japan's prolonged "super-easy" monetary policy, according to analysts.
The Bank of Japan's below-zero interest rate that is widening with the U.S. Fed's rate and expectations of Prime Minister Shinzo Abe continuing a fiscal stimulus for his third term are fueling the yen's depreciation. The U.S. rate was recently hiked to between 2 percent and 2.25 percent.
Also, there is another trade war emerging with President Donald Trump signaling the U.S. would go after Japan to settle its "high deficit" with the world's third largest economy.
Analysts forecast the weak yen to continue as it could take years before Japan's central bank normalizes its unorthodox policy.
"Japan could maintain its easy money policy at least until 2020, given its slow inflation and consumption tax, which is expected to be hiked in 2019," said Oh Jae-young, an analyst at KB Securities.
The won ended at 977.53 won per 100 yen as of Sept. 28, the yen's weakest since June 14, 2018, when it was 975.32 won, according to the Bank of Korea (BOK). Some analysts forecast it could depreciate toward 960 won in the coming weeks.
The weak yen is positive for Japanese exporters as they will be able to gain a price competitive advantage in the number of products sold abroad such as cars, ships and electronic appliances.
Those are in direct competition with Korean producers, which the Korea International Trade Association (KITA) said would lose their edge.
If the value of the yen drops 1 percent against the won, Korean exports will decrease 0.49 percent on average a year, according to the KITA research center.
On the flip side, it would make it much more affordable for Korean importers to finance the purchase of Japanese high-tech parts as the weak yen will make them inexpensive.
Korean manufacturers such as display makers, rely on Japanese components and equipment for final assembly.
The Japanese yen is considered one of the world's three safe-haven currencies alongside the U.S. dollar and the euro.
The yen gained momentum in July when a crisis erupted in Turkey, reaching 1,020 won per 100 yen.
However, it started to lose value especially after President Trump told the press the two sides' relations may sour as soon as it tells Japan to "pay" for the trade deficit. His comment came a few days ahead of the U.S. Fed raising its key rate, Sept. 27.
The U.S. deficit with Japan reached $68.8 billion last year, the third highest after China and Mexico, according to the U.S. Department of Commerce.
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The Bank of Japan's below-zero interest rate that is widening with the U.S. Fed's rate and expectations of Prime Minister Shinzo Abe continuing a fiscal stimulus for his third term are fueling the yen's depreciation. The U.S. rate was recently hiked to between 2 percent and 2.25 percent.
Also, there is another trade war emerging with President Donald Trump signaling the U.S. would go after Japan to settle its "high deficit" with the world's third largest economy.
Analysts forecast the weak yen to continue as it could take years before Japan's central bank normalizes its unorthodox policy.
"Japan could maintain its easy money policy at least until 2020, given its slow inflation and consumption tax, which is expected to be hiked in 2019," said Oh Jae-young, an analyst at KB Securities.
The won ended at 977.53 won per 100 yen as of Sept. 28, the yen's weakest since June 14, 2018, when it was 975.32 won, according to the Bank of Korea (BOK). Some analysts forecast it could depreciate toward 960 won in the coming weeks.
The weak yen is positive for Japanese exporters as they will be able to gain a price competitive advantage in the number of products sold abroad such as cars, ships and electronic appliances.
Those are in direct competition with Korean producers, which the Korea International Trade Association (KITA) said would lose their edge.
If the value of the yen drops 1 percent against the won, Korean exports will decrease 0.49 percent on average a year, according to the KITA research center.
On the flip side, it would make it much more affordable for Korean importers to finance the purchase of Japanese high-tech parts as the weak yen will make them inexpensive.
Korean manufacturers such as display makers, rely on Japanese components and equipment for final assembly.
The Japanese yen is considered one of the world's three safe-haven currencies alongside the U.S. dollar and the euro.
The yen gained momentum in July when a crisis erupted in Turkey, reaching 1,020 won per 100 yen.
However, it started to lose value especially after President Trump told the press the two sides' relations may sour as soon as it tells Japan to "pay" for the trade deficit. His comment came a few days ahead of the U.S. Fed raising its key rate, Sept. 27.
The U.S. deficit with Japan reached $68.8 billion last year, the third highest after China and Mexico, according to the U.S. Department of Commerce.
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