Korean manufacturers vulnerable to currency risk

SEOUL, Oct. 1 (Yonhap) -- A majority of South Korea's manufacturers failed to
hedge against the volatile exchange rate, a poll showed Wednesday, as the local
currency plunged to a 64-month low the day before.

In the survey of 500 South Korean manufacturing companies taken in mid-September
by the Korean Chamber of Commerce and Industry, 65.4 percent of respondents said
they have no foreign exchange risk management plan, while 34.6 percent said they
had braced for growing exchange risk.
Among small- and mid-sized companies polled, 74.9 percent said they had not
established countermeasures against currency volatility. In contrast, 45.3
percent of big companies answered the same.
On Tuesday, the South Korean won dropped to 1,207 won against the U.S. dollar,
down 18.2 won from the previous day's close. The won has been one of the biggest
decliners among Asia's currencies.
The won's recent depreciation against the greenback pushed up domestic companies'
overseas shipments on-year in September, the survey found.
Those polled said the won should ideally hover around 1,000 won mark against the
dollar to maintain their profit margins, it said.
The local currency market is predicted to stabilize down the road on falling oil
prices and their positive impact on South Korea's current account balance, Vice
Finance Minister Bae Kook-hwan said on Wednesday.
In the meantime, 77.6 percent of the respondents said the call rate should be
lowered within the year so they can carry out planned capital spending.
The Bank of Korea raised its key interest rate in August by a quarter percentage
point to 5.25 percent to tame rising inflation expectations, marking the first
increase in a year.