Export Prices Reverse to Rise Due to 'Exchange Rate Effect'... DRAM Prices Also Increase

[Asia Economy Reporter Kim Eun-byeol] The export price index, which had been declining for three consecutive months due to falling semiconductor prices and a global economic downturn, reversed to an upward trend. The rise in the won-dollar exchange rate in December had a significant impact. However, excluding the effect of the exchange rate increase, the index remains at a slightly firm level.

According to the 'December 2019 Export and Import Price Index' released by the Bank of Korea on the 14th, the export price index in December last year was recorded at 97.54, up 0.8% from the previous month (96.74). This is the first increase in export prices in four months since August last year. However, compared to the same month last year, it fell by 3.1%, maintaining a decline for seven consecutive months.

The rise in export prices was largely influenced by the exchange rate. In December, the won-dollar exchange rate rose by 0.7% compared to the previous month, with notable increases in export prices for coal and petroleum products (3.8%), computers, electronics, and optical devices (0.6%). Agricultural, forestry, and fishery products also rose by 1.4% compared to the previous month. Due to the exchange rate effect, DRAM export prices also increased by 0.6% month-on-month. This marks the first rise in DRAM export prices in four months since August, when the exchange rate effect was also observed.

However, when excluding the exchange rate effect, the export price index based on contract currency rose by only 0.1% month-on-month. Compared to the same month last year, it fell by 7.2%. For computers, electronics, and optical devices, export prices actually fell by 0.1% when excluding the exchange rate. Song Jae-chang, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "In the case of computers, electronics, and optical devices, price reductions occurred in some products, likely due to year-end inventory clearance."

For liquid crystal displays (LCD) used in TVs, export prices rose by 0.7%, but excluding the exchange rate effect, they remained flat. DRAM export prices increased by 0.6%, but excluding the exchange rate effect, they decreased by 0.2%. DRAM export prices had previously risen by 2.9% in August due to the exchange rate effect but then fell again.

For the entire year of 2019, export prices fell by 3.3% compared to the previous year, and by 8.2% based on contract currency. The sharp decline in semiconductor prices and the drop in international oil prices over the past year influenced export prices.

The import price index for December was recorded at 108.84, up 1.6% from the previous month. This was due to a simultaneous rise in import prices for raw materials (up 2.4%), intermediate goods (up 1.5%), capital goods, and consumer goods (up 1.0% and 0.6%, respectively) as international oil prices increased. The import price index also rose by 3.4% compared to the same month last year, ending a six-month consecutive decline and reversing to an upward trend.

Import prices were also significantly influenced by the exchange rate effect. When excluding the exchange rate effect, the import price index based on contract currency rose by only 0.9% month-on-month. Compared to the same month last year, the import price index based on contract currency fell by 1.0%. For the entire year of 2019, import prices rose by 0.8% compared to the previous year, but based on contract currency, they fell by 4.1%.

A Bank of Korea official stated, "Looking at the annual basis last year, despite the decline in international oil prices, the rise in the exchange rate had an impact." The explanation is that while falling oil prices should lower import prices, the increase in the exchange rate offset the decline in oil prices.

This content was produced with the assistance of AI translation services.