SEOUL (Reuters) - South Korea expressed its concern on Sunday about the possible impact on its export industries from the yen’s renewed weakness but stopped short of promising any action aimed at pulling the won’s value down.
Ahn Chong-bum, a top presidential economic policy aide, said in his monthly briefing that South Korean companies should turn the yen's JPY= weakening into an opportunity to boost capital investment at home and strengthen their competitiveness.
“Companies need to actively utilize the ‘low-yen situation’ as an opportunity to increase investment, banking on the falling prices of Japanese-made capital goods and to strengthen competitiveness through structural improvement,” a presidential office statement quoted Ahn as saying.
South Korea relies heavily on Japan for imports of machinery and other production equipment for use at its domestic plants and Ahn was referring to the falling cost of Japanese products when converted into the dollar or won.
The yen JPY= tumbled globally on Friday after the Bank of Japan shocked financial markets by expanding its massive stimulus spending in a stark admission that economic growth and inflation have not picked up as much as expected.
South Korean companies and currency traders pay especially close attention to the yen's movements as policymakers used to intervene and sell the won KRW= to keep the local currency from strengthening against the yen.
But Ahn made no specific comment on whether the government will take action toward that effect, saying instead that it was no longer an era of price competition.
South Korea’s exporters and some media have warned that the weaker yen would seriously hurt the country’s economy, but policymakers have showed a relatively cautious response to such arguments.
The won has risen 4 percent in value against the yen JPYKRW= - set by each currency’s change against the dollar - on top of a whopping 24 percent gain in 2013.
Reporting by Choonsik Yoo; Editing by Kim Coghill