The Two Sides of a Strong Dollar: Cost Pressures vs. Export Tailwinds

Won-Dollar Exchange Rate Surpasses 1,560 During Trading
Import-Dependent Firms Face Higher Costs
Samyang and APR Expect Gains from Currency Conversion

As the won-dollar exchange rate recently surpassed 1,560 won—reaching its highest level since the foreign exchange crisis—consumer goods companies are experiencing mixed fortunes. While a rising exchange rate was once widely regarded as a negative factor for the entire food and cosmetics sectors, the impact now varies by company depending on their share of overseas sales.

According to the Bank of Korea and industry sources on June 8, the average won-dollar exchange rate for the second quarter of this year was 1,490.98 won, marking the highest level since the first quarter of 1998, immediately after the foreign exchange crisis. On this day, the won-dollar rate in the Seoul foreign exchange market climbed as high as 1,555.2 won during early trading, the highest since the 2008 financial crisis. On June 5, it surged to 1,561.5 won during the session, bringing the 1,600-won threshold into view. Analysts attribute the continued decline of the won’s value to the simultaneous outflow of foreign capital and the strong dollar.

A view of the instant noodle sales stand at a large supermarket in Seoul on June 10, 2025.

The companies feeling the pressure of a weaker won most acutely are those in the food sector with high dependence on imported raw materials. Since they procure key ingredients such as wheat, palm oil, cocoa, and packaging materials from abroad, a rising exchange rate inevitably increases their cost burden. Even when importing the same quantity of raw materials, the amount in won that companies must pay rises.

In fact, Lotte Wellfood estimated in its first-quarter report that a 10% rise in the won-dollar exchange rate would reduce its pre-tax profit by about 5.7 billion won. Industry insiders also point out that, recently, fluctuations in the exchange rate have had a greater impact on profitability than changes in raw material prices. A source from the food industry said, “Companies with a high proportion of imported ingredients inevitably face greater burdens from a rising exchange rate. However, since each company uses its own currency hedging strategies, the actual impact on performance will differ.”

On the other hand, even within the food industry, companies with a high proportion of overseas sales are expected to benefit from a strong dollar. The most notable examples are Samyang Foods and Orion. Thanks to the global popularity of Buldak Ramen, approximately 80% of Samyang Foods’ revenue comes from overseas. Revenue earned in dollars from the United States, China, Europe, and other regions increases in won terms as the exchange rate rises. Likewise, Orion’s overseas operations in China, Vietnam, and Russia account for around 70% of its business, so the company stands to benefit from the weaker won.

The cosmetics industry is also expected to benefit overall from the strong dollar. As the K-beauty boom spreads to the United States, Japan, and Southeast Asia, overseas sales have been increasing rapidly. APR, which has made a successful push into the U.S. market with its Medicube brand, recorded exports of 1.2257 trillion won last year, with overseas sales making up about 80% of total revenue. An APR official explained, “Because of our high share of exports to the United States and the high proportion of raw materials sourced domestically, the benefits from a rising exchange rate are relatively large.”

Cosmetics Original Development Manufacturing (ODM) companies are experiencing a similar trend. Firms such as Kolmar Korea and Cosmax supply products to both global and indie brands. Although they do import some ingredients and raw materials, the growth in overseas sales is said to offset much of this. A source from the cosmetics ODM industry commented, “While a higher exchange rate can be reflected in the unit costs of some raw materials, the impact of K-beauty exports is much greater, so the effect on profitability is limited.”

For the duty-free industry, a weaker won lowers the cost of shopping in Korea for foreign tourists, which can help boost tourist numbers. However, duty-free shops purchase many of their luxury goods, cosmetics, and alcoholic beverages in dollars or euros, so a stronger dollar directly raises their procurement costs. The industry believes that the positive factor of increased foreign demand and the negative factor of higher costs are operating simultaneously, meaning that the actual improvement in profitability is not expected to be significant.

An industry source said, “Even among consumer goods companies, the impact of a rising exchange rate differs across the board. The higher the proportion of overseas sales, the greater the potential benefit from a weaker won.”

This content was produced with the assistance of AI translation services.