Global investment banks (IBs) expect the Japanese currency will continue to depreciate against the U.S. dollar in 2013, data showed Monday, sounding alarm bells for the export-reliant South Korean economy.
In the latest forecast, 18.3 percent of 60 major global investment banks anticipated the Japanese currency will trade above 100 yen against the greenback in the fourth quarter of this year, market data showed.
Credit Suisse predicted an average yen-dollar exchange rate of 105 yen at the end of 2013, while Morgan Stanley forecast 100 yen.
Macquarie also predicted the rate of 100 yen for the second quarter this year.
The outlook came as Japanese Prime Minister Shinzo Abe is expected to bolster quantitative easing, giving an extra push to the weak yen, market watchers said.
On Wednesday, the yen-dollar exchange rate hovered above 94 yen for the first time in 33 months, after media reports that the Bank of Japan chief, who opposed Abe's stimulus plans, had announced his resignation.
Meanwhile, the won's recent increase against the yen has sparked worries over earnings of South Korea's key exporting companies. A stronger won inflicts foreign exchange losses on exporters, making South Korean goods more expensive overseas.
The export index compiled by FnGuide Inc., a financial information provider, reached 9,473 in February, plunging 18.3 percent from 11,595 tallied a year earlier, reflecting the weak performances of local exporters.
"While the weak fourth-quarter earnings of listed firms and foreign sell-offs weighed down on the stock market this year, the currency volatility had the biggest impact," said Lim Soo-kyun, an analyst at Samsung Securities Co.
In 2012 alone, the Korean currency appreciated about 19 percent against yen compared with the previous year. The greenback serves as the benchmark for the won-yen cross rate.
Park Hyung-jung, an analyst at Meritz Securities Co., echoed the view, adding South Korea's export will also remain stagnant due to the cloudy economic outlook on China, the country's biggest trading partner. (Yonhap News)