Japanese currency's weakness to the U.S. dollar hit hard South Korean exporters as the weak yen dented exports especially by carmakers and machinery firms, a central bank report showed Wednesday.
The weak yen had a negative impact on local carmakers, including Hyundai Motor and Kia Motors, located in the metropolitan area and machinery companies headquartered in the southeastern region, according to the Bank of Korea (BOK)'s quarterly report on provincial economies called golden book.
The report is based on a survey response from 872 companies and institutions headquartered in provincial areas. The poll was conducted by the BOK from late October to mid November.
After the Bank of Japan's surprise stimulus expansion last month, the yen fell further and stayed at the seven-year low to the dollar, fueling worries about competitiveness of South Korean exporters that are rivaling with Japanese companies in many industries globally.
Japanese automakers allegedly agreed with auto parts contractors on price cuts to reduce production costs, while increasing investment in research and development (R&D).
Services companies in the southeastern region, neighboring Japan, were hit hard by the weak yen, which reduced Japanese tourists visiting the region. Food and lodging firms responded that it had difficulties from the weak yen.
Despite the weak yen, the South Korean currency's fall to the dollar offset some negative impact from the weak yen, the BOK said.