The USD/KRW Exchange Rate That Changed Dramatically in Two Months… Why Companies Lost Time to Adapt | Myung Min-jun, Park Ga-young, Cha Young-ju

Summary

Cha Young-ju, director of the Wise Economic Research Institute, joined the hosts to explain the rapid two-month appreciation of the won from around 1,500 to 1,300 USD/KRW and why it has left Korean exporters little time to adapt. The discussion covered Hyundai Motor's FX losses, Korean Air's lower fuel and USD lease costs, Samsung Electronics/SK hynix's ability to offset FX through memory pricing, and margin pressure on most other exporters, defense, and shipbuilding. They also debated the appropriate long-term won level and concluded that the near-term path depends on the FOMC dot plot, with 1,300s stabilization potentially reopening opportunities in exporters.

• USD/KRW fell from about 1,500 to 1,300 in two months, creating adaptation problems for Korean companies.
• Cha Young-ju said menu costs and low margins make it hard for most exporters to pass through FX losses quickly.
• Hyundai Motor is negatively affected because its plan assumed about 1,400 won/USD; Korean Air benefits from cheaper fuel and won strength reducing USD lease costs.
• Samsung Electronics and SK hynix can better offset FX losses through memory ASP increases, and may regain momentum if key levels hold after the FOMC.
• Defense and shipbuilding sectors face margin vulnerability if the won strengthens sharply, due to low operating margins and competition.
• A host argued the appropriate long-term USD/KRW level may be 1,000-1,100, while Cha warned that such strong won would be dangerous for export-driven Korean companies.
• Near-term FX trading is seen as difficult; if USD/KRW stabilizes in the 1,300s after the FOMC and Chuseok, export stocks could be revisited.