Trade between South Korea and Japan fell nearly 14 percent on-year in the first quarter of the year as the relatively strong won reduced demand for South Korean goods in the neighboring country, a report showed on Tuesday.

The bilateral trade between the neighboring countries came to US$18.45 billion in the January-March period, down 13.9 percent from a year earlier, according to the report by the Korea International Trade Association (KITA).

In the three-month period, South Korea's exports to Japan plunged 22 percent on-year to $6.39 billion, with its imports from the neighboring country also shrinking 8.8 percent to $12.05 billion, the report said.

The decline in their bilateral trade was largely attributed to the weakening of the Japanese yen against the Korean won, which has hurt the price competitiveness of South Korean goods in Japan, according to South Korea's (Yonhap) News Agency.

"The most significant variable that affects the bilateral trade is the currency exchange rate," said Oh Se-hwan, a senior researcher at KITA. "The Japanese yen is trending lower against the Korean won this year, so the drop in trade volume has been larger." By trade item, exports of petroleum products saw the largest drop of 54.3 percent over the cited period, followed by steel plates and molds at 33.1 percent and 19.3 percent, respectively, according to the report.

Among Japanese goods, imports of pig iron and scrap iron slumped 46.7 percent, while petrochemical intermediate materials and steel plates trailed with a 26.9 percent and 24 percent drop, respectively.

South Korea's trade with Japan has been on a decline for the past three years since it peaked at $108 billion in 2011. Last year, bilateral trade between the two countries came to $85.95 billion, down 9.2 percent from the year before, according to KITA.