South Korea is closely monitoring the foreign exchange market and carefully assessing the impact of a weak Japanese yen, the country's top economic policymaker said Thursday.

In a meeting of economy-related ministers, Choi Kyung-hwan said the weak yen is putting local carmakers, steel mills and other products that compete directly with goods made in Japan, at a disadvantage in overseas markets.

"One way to turn the weak yen to the country's advantage is to get companies to buy more capital goods from the neighboring country when prices are low. Such investments can benefit the country down the road," he said.

Choi said that Seoul will monitor currency market developments and continue to take measures to smooth out excessive volatility that can adversely affect the economy.

The official added the weak yen is helping Japan attract more Chinese tourists, which can cut into the number of visitors coming to South Korea.

"There is a need to develop more tourism-related content and make the country more attractive as a tourist destination," said the official, who doubles as deputy prime minister in charge of economic affairs.

In the first quarter of this year, inbound Chinese tourists shot up 36 percent on-year, while numbers going to Japan soared 93 percent.

On exports, the key driver of Asia's fourth-largest economy, Choi said the drop in international crude prices has caused global trade to contract 9.1 percent in January and February, and that South Korea's outbound shipments are being affected by this trend.

The country's exports were down 2.1 percent in the first two months of this year, but this stood at minus 4.3 percent in the January-April period.

"There is a need to determine if there are structural problems facing South Korean exports and then come up with countermeasures," the policymaker said.

The South Korean won fell to its lowest in almost two months as foreign investors were on a course toward a stock sell-off amid increased volatility in the global stock and bond markets.

The local currency closed at 1,089.70 won per dollar, down 9.7 won from the previous session's close, after previously dipping as low as 1,090.90 won.

The won came under selling pressure on growing expectations that non-farm payroll data in the U.S., due later in the day, would be roughly in line with market estimates, bolstering views that the U.S. Federal Reserve may start raising borrowing costs in the second half of the year.

Dealers said the minister's remarks were also interpreted as indicating that the currency authorities may step in to curb the won's sharp ascent to the Japanese yen.

The Japanese yen, aided by expansionary fiscal and easing monetary policies, has been losing ground against other currencies, including the South Korean won, in recent years.

The won-yen arbitrated exchange rate stood at 912.04 won per 100 yen as of 3:00 p.m.

The official, meanwhile, expressed regret that various economic reform bills were not passed by parliament on Wednesday.

He said that revisions to the income tax rules must be passed by Monday at the latest, in order for people to get additional tax refunds for last year. (Yonhap)