S.Korea warns of weak April exports as yen stays down

SEOUL, April 28 Sun Apr 28, 2013 8:46am EDT

SEOUL, April 28 (Reuters) - South Korea warned on Sunday its exports this month would barely grow as the yen's slide directly hurts sales to Japan and damaged the price competitiveness of its exporters competing with the Japanese in other markets.

The Ministry of Strategy and Finance said the country's overall exports were influenced more by the strength of the global demand than the yen's value, but added weakness in the Japanese currency was negative to South Korea's overseas sales.

Exports by Asia's fourth-largest economy will probably grow only 1 percent to 2 percent for the whole of this month from a year ago even as there are two more working days this year, the ministry said in an unscheduled statement.

This would still be a small improvement after exports grew 0.5 percent in the first quarter from the comparable 2012 period, swinging from a 0.3 percent drop in the final quarter of last year and marking their first growth in a year.

The Ministry of Trade, Industry and Energy is due to publish April exports and imports data on Wednesday.

The finance ministry, also in charge of foreign exchange policy, said it would "pay attention" to currency movements, a rhetoric often used to indicate its intention to intervene in case of a big change in the value of the won.

The yen has dropped 20 percent against the dollar since the end of September last year on Prime Minister Shinzo Abe's massive monetary easing drive aimed at ending deflation, and giving Japanese exporters an upper hand against rivals.

South Korean policymakers have said its automobile and steel makers are the most vulnerable to the falling yen in terms of export competitiveness and profitability because they are in fierce competition with the Japanese in key export markets. (Reporting by Choonsik Yoo; Editing by Jeremy Laurence)