Due to the sharp drop in exchange rates... October export prices fall the most in 22 months

Published 12 Nov.2020 06:00(KST)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Due to the decline in the won-dollar exchange rate, export prices in October fell at the largest rate in 1 year and 10 months.

According to the 'October 2020 Export-Import Price Index' released by the Bank of Korea on the 12th, the export price index last month was 92.51 (2015=100), down 2.6% from the previous month. This marks the third consecutive month of decline and is the largest drop since December 2018 (-2.8%). Compared to the same month last year, it fell by 6.4%, marking 17 consecutive months of decline.

Kang Hwan-gu, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "Export prices fell as the won-dollar exchange rate declined, along with decreases in computers, electronics, and optical equipment. Although semiconductor prices and oil prices also dropped, the exchange rate was the biggest factor."

The average won-dollar exchange rate fell 2.9% from 1,178.80 won in September to 1,144.68 won last month. Dubai crude oil prices dropped 2.0% from an average of $41.51 per barrel in September to $40.67 last month.

Since the won-dollar exchange rate continues to decline in November, export price weakness is expected to persist. Kang said, "Both the average exchange rate and oil prices up to the 10th have continued to decline, which will act as factors lowering export prices."

Export prices based on contract currency, excluding exchange rate effects, rose 0.1% compared to the previous month but fell 3.8% compared to the same month last year.

Import prices in October were 95.63, down 2.6% from the previous month, marking four consecutive months of decline. Compared to the same month last year, they fell 11.6%, marking nine consecutive months of decline. The drop in import prices in October was mainly due to falling oil prices and decreases in mineral products.