(MENAFN- Qatar News Agency) Oul may 11 (qna) - south korean manufacturers think 1052.3 won to the us dollar is the break-even exchange range and that the present strengthening of the local currency is eating into their profitability a poll carried by a local business group showed sunday.
the survey conducted on 120 large manufacturers by the federation of korean industries (fki) showed many are struggling with current conditions and warned if this trend continues they may have to reassess their corporate goals according to (yonhap) news agency.
those in the food sector said they can be hurt by weak profits if the exchange rate reaches 1075.0 won with those in petrochemicals and electronics saying the appropriate rates are at 1066.7 won and 1052.3 won respectively to the greenback. for autos and car part companies the break-even point was surveyed at 1050.0 won.
the lobbying group for the country's largest businesses said companies reported they established annual growth targets for 2014 under the assumption that the average exchange rates will hover around 1077.9 won to the greenback.
in the first eight days of may the average exchange rate stood at 1029.7 won to the dollar a rise of 6% for the korean currency vis-a-vis 1095.0 won tallied for the same period in 2013. on friday the won stood at 1024.4 won.
"companies said that for every 10% appreciation of the won the operating profit ratio will fall 0.8%" the fki said in a press release.
it said manufacturers are investing more in derivative products to hedge against unfavorable exchange rates and are trying to reduce production costs.
the federation also said companies were asking the government to do more to expand export-related financing increase credit guarantees and build up infrastructure that can help companies. it said policymakers should consider adopting expansionary monetary policies. (qna)
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