South Korea Financial Regulator Worried About Continued Yen Weakness

South Korea’s financial regulator on Thursday expressed worries about rising volatility in the local financial market stemming from the continued trend of weak yen.

“Possibilities were raised that the persistent weak yen trend and yen carry trading could widen fluctuations in the local financial market,” Financial Services Commission (FSC) Vice Chairman Jeong Chan-woo said at a meeting for assessing financial conditions.

Jeong noted that there has been no big impact of the weak yen trend on the local financial market at the current stage, but the regulator said that there remained the need to closely monitor the continue trend of the weak yen and the reduction of quantitative easing in the United States.

The devaluation of the Japanese yen arising from monetary easing under the Shinzo Abe government threatened to South Korean exporters that are fiercely competing with Japanese rivals in overseas markets.

The South Korean won was quoted at 1,090.3 won per 100 yen on Wednesday, appreciating sharply from 1,234.1 won as of the end of 2012 and 1,497.8 won as of end-2011.

Moody’s warned that the weak yen trend will have a negative impact on credit quality of South Korean exporters. “With the won’ s rise, automakers, chemical companies and construction companies are most vulnerable because of their large exports in the U.S. dollar,” Chris Park, a Moody’s vice president, said in Seoul on Wednesday.

via Xinhua

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