South Korea has cut interest rates in an attempt to increase growth and counter the weak Japanese yen.
The surprise move comes after South Korean exporters have seen their price competitiveness suffer as a result of the Japanese government's recent policies left the yen weakened.
South Korea's central bank lowered its benchmark interest rate by a quarter of a point to 2.5 per cent.
A weakening global demand for Korean products has also seen the economy take a hit, as exports account for almost half of the entire South Korean economy.
Jun Min-Kyoo from Korean Investment and Securities said: "This month's rate cut means that the Bank of Korea admits that the economy is not as good as they think."
The Japanese yen has dropped nearly 20 per cent against the US dollar since November 2012 - making Japanese goods more affordable in foreign markets.
In contrast, the South Korean won has risen more than eight per cent against the US dollar over the past year, making its goods less affordable than those of Japan.
By Gary Cooper