The Korean government plans to unveil a set of measures, including tax and financial support to help exporters cope with the weakening yen, government sources said Wednesday.

The dollar broke the 110 yen barrier for the first time in more than six years on Wednesday. The greenback soared to 110.09 yen in late morning Tokyo trade, its highest level since August 2008 and up from 109.64 yen in New York.

Seoul also plans to provide diverse incentives to firms seeking to expand their facility investment such as importing machinery and other equipment whose prices have fallen thanks to the depreciating yen, the sources said. The measures are to be announced within this month.

“We are drawing up measures jointly with related ministries as worries are mounting that a protracted weakness of the Japanese yen could hurt our exports and growth and could eventually affect overall industrial competitiveness ... (The measures may be different) from previous measures,” a Finance Ministry official said on condition of anonymity.

“They will include not only support measures aimed at protecting small exporters but also diverse tax and financial incentives for companies seeking to expand investment by making use of the declining value of the yen.”

The move comes amid growing concerns the recent marked decline in the yen’s value could hurt the price competitiveness of Korean-made products.

Korea and Japan are major competitors in the global market for shipments of electronics, automobiles and other products.

On Wednesday, the Korean currency reached its weakest level against the U.S. dollar in six months, extending its loss to the fifth consecutive session, as the greenback built up further gains against major peers amid concerns over a slowdown in the eurozone economy and hopes for a further monetary easing in Asia’s fourth-largest economy.

The local currency closed at 1,062.70 won against the greenback, 7.50 won weaker than the previous session’s close, after falling to as low as 1,064.50 won at one point.

The figure marks the won’s lowest value since the closing price of 1,064.70 won on March 31.

The local currency has been losing ground against the dollar on a possibility that the U.S. Federal Reserve will accelerate its rate hike.

The U.S. economy, the world’s largest, grew at an annual rate of 4.6 percent in the second quarter, the fastest pace since 2011, further raising hopes that its currency would strengthen against its peers.

In contrast, market players’ hopes for another rate cut by the Bank of Korea ran high after South Korean inflation grew at its slowest rate for seven months in September on the back of stable prices of food, and as the recovery pace in Asia’s fourth-largest economy is showing signs of a let-up.

The central bank cut its base rate by a quarter percentage point to 2.25 percent in August and is expected to make another rate reduction in either October or November to help boost the economy’s still weak recovery pace.

Also, the European Central Bank is widely forecast to make a further easing this month, providing a further boost to the already strong dollar, analysts said. 

(From news reports)