Strong Korean won plagues big exporters amid uncertainties on the global front

Korean exporters have been hit with another whammy - steep rise in the won - on top of sluggish global demand with the volatility in the foreign exchange adding to uncertainties on the external front.

Samsung Electronics and other electronics producers whose bulk of shipments are headed overseas are struggling to minimize exposure to volatility in the won through hedging and other means, but would have to fear worsening in the third quarter earnings from the won’s sharp gain.

On Wednesday, the dollar slipped below 1,100 won-threshold in 13 months.

Samsung Electronics benefited 500 billion won from a weaker won in the first quarter and lost 300 billion won when the won strengthened in the second.

SK Hynix, the world’s second largest chipmaker after Samsung Electronics, fears additional dent on its balance sheet on top of depressed chip prices. The company in a conference call said won’s gain of 3 to 4 percent in the second quarter had hurt profit by an estimated 100 billion won. The country’s largest display maker LG Display is known to lose 8 billion won a month from a swing of 10 won against the dollar.

Carmakers are equally apprehensive. According to a think tank of Hyundai Motor Group, sales of Korea’s five finished carmakers will shrink by about 420 billion won from a rise of 10 won against the greenback. Hyundai Motor Group which generates 80 percent of revenue from overseas cannot but become jumpy about currency fluctuations.

Oil refiners are another sector sensitive to currency movement. Cheaper dollar could reduce the cost of importing crude, but their profit would be hurt as exports exceed imports. For SK Innovation, exports take up more than 70 percent. Other refiners which also get more than half of their revenue from overseas shipment are adjusting outlook as they have predicted the exchange rate in a band of 1,170 won to 1,200 won this year.

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