As Chinese tourists pull back from visiting Japan amid a diplomatic row, a slumping won is positioning South Korea as the new bargain destination for mainland travellers, analysts said.
The Korean won has become Asia’s worst-performing currency in the second half of the year, weighed down by an interest rate gap with the United States and sustained equity outflows to the US market.
In October, South Korea’s real effective exchange rate plunged to a 16-year low – falling even further than it did after former president Yoon Suk-yeol declared martial law last December – according to data from the Bank for International Settlements.
The Chinese currency gained 9.4 per cent against the won between July 1 and December 16, with the won weakening to 0.0048 against the onshore yuan – a shift with the potential to reshape regional travel flows.
“The weaker won has made South Korea a better-value destination for Chinese travellers at the same time Japan has become politically ‘expensive’,” said Subramania Bhatt, CEO of the travel marketing and technology firm China Trading Desk.
China and Japan have been embroiled in a diplomatic row since early November, when Japanese Prime Minister Sanae Takaichi indicated that Tokyo might intervene in the event of an armed conflict in the Taiwan Strait.
