FX-related losses more than double for Korean Inc. in Q3

[Photo by MK DB]

Foreign exchange-related losses for Korean Inc. have more than doubled in the third quarter ended September from three months ago as the Korean won weakened to its lowest level against the U.S. dollar since the 2009 global financial crisis.

Foreign exchange-related losses of listed companies in Korea stood at 5.78 trillion won ($4.4 billion) in the July-September period, widening from a loss of 2.56 trillion won in the second quarter, according to financial market tracker FnGuide on Monday. Losses widened more than six times from 959.3 billion won in the same period a year ago.

Foreign exchange-related profit and losses occur from a change in asset and debt value. Losses worsened corporate profitability as they reduce overall net profit. Losses came from continued fall in the won’s value against the greenback, especially for those listed companies with increased foreign exchange debt.

According to Woori Bank, the U.S. dollar was traded at 1,342 won in the third quarter, up 6 percent from 1,261 won in the second quarter. The Korean won still remains below 1,300 won threshold against the U.S. dollar in the fourth quarter as of Dec. 18. The currency, however, is expected to gain against the greenback in the fourth quarter from the third quarter.

More foreign exchange-related losses come from increased foreign currency debt by listed public entities like Korea Electric Power Corp. and Korea Gas Corp. for overseas investment.

KEPCO losses nearly doubled from 934.1 billion won in the second quarter to 1.87 trillion won in the third quarter while KOGAS losses widened from 202.1 billion won to 467.5 billion won.