Korea's economic policy makers, exceeds its export-dependent economy potential damage to Japan's massive monetary expansion and competitive challenges raised by a cheap yen anxious, have become more optimistic, because of their fear of failure.
The plan by Japanese Prime Minister Shinzo Abe, double the amount of capital recycling economy, sending the yen fell, and may release a lot of hot money inflows to South Korean investors seeking fast, higher yields "Abenomics".
The weakening of the yen to the Japanese exporters pricing advantage, their Korean rivals, but the overall impact has been as South Korean manufacturers of products from smart phones to mute the car to improve its competitiveness in the global market.
Exports from January to March quarter of the first annual growth in one year, although sales in Japan fell to unusual strong performance in early 2012 with the Japan earthquake reconstruction work related.
Despite concerns about hot money inflows, the Republic of Korea in the capital and financial account net outflow of decline in interest rates this year as the won weakened, an accident, but the the convenience side effects military tensions with North Korea.
"Hot money flows, we will never be complacent, but unlike the dollar, yen and there is no indication yet (heavy capital inflows)," Cho Won-dong, assistant to the top of the President for Economic Policy, said by phone.
South Korean officials believe that the yen's decline, until the normalization of overshoot is now more like the global financial crisis since 2008 than the rout. The yen has been higher than its pre-2008 level until the end of last year more than 20%.
In stark contrast, the won has been much weaker than prior to the 2008 level, as global investors to avoid riskier assets such as emerging market currencies, flock to safer investments.
Sense of urgency faded
A strong rise in the last months of 2012, the won-dollar exchange rate fell 3.6% in the first quarter of this year, the worst time in a month and a half, and to help offset compared against the yen, compared with last year a decrease of 8.0% over the same period, the United States unit.
Bank of Korea to get rid of the potential risks from Abenomics leave its benchmark interest rate at 2.75% unchanged, the shear pressure a surprise move last week, ignoring the government and financial markets.
"In view of the Monetary Policy Committee to keep the policy rate unchanged last week, I think that the MPC is not so worried about its security," said ING economist Tim Condon, Singapore, refer to the Korean Monetary Policy Committee set fixed rate bank.
Bank of Korea is expected to remain more focused on domestic factors than on Abenomics - such as depressed real estate industry, after years of over-consumption of household deleveraging signs, as well as creating employment opportunities slower pace.
Condon said: "Maybe they (MPC) has taken a long-term point of view, to re-invigorate Japan will eventually actively Korea.
The weak yen to help those machinery and production tools made in Japan, they depend Korean manufacturers in lower prices. Customs data show that, in volume terms, South Korea to buy more than 20% of its capital goods imported from Japan.
South Korea also has its own problems, will hinder a more positive response to the yen's decline. Global pressures, and sometimes even in their own economic fundamentals seem to sound frequently a large number of capital flight.
The analyst said that the international assistance that was rescued from the Asian financial crisis of the 1990s, South Korea, should be more worried about the rapid decline of the won, as this could quickly lead to massive sell-off by foreigners.
"As we have seen in the past, won a dramatic decline can easily stimulate a capital flight, which in turn sent to win the up and down further lead to a vicious circle," said the Yinshan De Ling, a Senior Research Fellow at the Korea Institute for International Economics policy.
Yin is the advisor of the Minister of Finance, at the end of 2008, the won-dollar exchange rate fell by nearly 30 percent in just two months, the central bank had to sell billions of dollars to prevent repeat 1990s-style currency crisis.
 



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