Seoul: The proportion of South Korean exports settled in the local currency saw a decline in 2024, primarily due to weaker growth in auto exports, as revealed by data from the central bank. The Bank of Korea (BOK) reported on Monday that the use of the won accounted for 2.7 percent of all export settlements last year, marking a 0.2 percentage point decrease from the previous year.
According to Yonhap News Agency, the share had experienced an increase in 2023 for the first time in six years but fell once more in 2024. The downturn was largely attributed to slower growth in automobile exports, which are typically settled in Korean won. Although car exports rose by 6 percent last year, they fell short of the overall export growth of 8.1 percent, as indicated by the BOK.
Additionally, a decrease in machinery exports contributed to the reduction in won-based settlements. Meanwhile, the U.S. dollar retained its position as the dominant currency for settling South Korean exports in 2024, accounting for 84.5 percent of total export settlements, up from 83.1 percent in 2023. "Semiconductors, computer-related products, and ships are largely settled in U.S. dollars, and the increase in their exports last year led to a rise in the overall proportion of dollar settlements," explained BOK official Kim Sung-joon.
The report highlighted that chip exports, typically settled in U.S. dollars, surged by 43.9 percent on-year, reaching a record high of US$141.9 billion in 2024. Conversely, the use of the euro for export settlements decreased to 6.0 percent from 6.8 percent a year earlier, while the share for the Japanese yen dropped by 0.3 percentage point to a record low of 2.0 percent.
Kim further noted, "The proportion of yen settlements declined mainly in machinery and steel products. Over the longer term, the decrease has been influenced by a reduction in trade volume with Japan." South Korea's exports to Japan have been on a downward trajectory, falling to $29.61 billion last year from a peak of $39.68 billion in 2011, as per government data.
The Chinese yuan accounted for 1.5 percent of total export settlements last year, a slight decrease from 1.7 percent in the previous year. On the import side, the share of won-based settlements stood at 6.3 percent, down 0.3 percentage point from the previous year. The usage of the U.S. dollar for imports represented 80.3 percent of the total, slightly down from 80.5 percent a year ago, as reported by the BOK.
In 2024, South Korea's exports reached a new annual record of $683.8 billion, driven by robust semiconductor shipments, while imports decreased by 1.6 percent on-year to $632 billion.