South Korea Posts Current-Account Surplus in November
South Korea posted a current-account surplus for a second straight month in November, easing pressure on the won, the region's worst-performing currency this year.
The surplus widened to $2.06 billion from $1.67 billion in November 2007, the Bank of Korea said in Seoul today. A surplus means there are more U.S. dollars flowing into the country than going out, increasing demand for the local currency. The nation posted a record $4.75 billion excess in October.
The won climbed to 10-week high after the report. The currency has gained 21 percent since setting a decade low on Nov. 21 amid speculation the central bank bought it to help bolster balance sheets before year-end accounts are filed and after the government signed swap deals with the U.S., China and Japan, giving access to dollars.
“Things are looking better as we had a good surplus again last month,” said Chun Chong Woo, a senior economist at SC First Bank Korea Ltd. in Seoul. “It'll help stabilize the currency if this trend continues. The worst seems to be over for the won.”
A decline by the won earlier this year led to speculation that the government may have return to the International Monetary Fund for help 10 years after a bailout during the Asian financial crisis. President Lee Myung Bak said last week the economy may shrink in the first half of next year, which would mark the nation's first recession in a decade.
The Korean currency rose 0.6 percent to 1,257.75 per dollar at 11:09 a.m. in Seoul. The won's 26 percent this year makes it the region's worst performing currency. The Kospi stock index gained 1 payday cash loans.7 percent.
More Surpluses
South Korea may keep posting current-account surpluses in coming months as imports fall faster than exports amid a decline in oil costs, Yang Jae Ryong, a statistics official at the central bank, said in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income.
The nation's current account has been in deficit every month but three this year as higher oil prices and the weaker won drove up the cost of imported goods.
The surplus on traded goods narrowed to $994.6 million last month from $2.63 billion in October, today's report showed. The trade surplus was $2.72 billion in November 2007.
Total exports on a customs-cleared basis, which excludes ships, dropped 19 percent in November from a year earlier, compared with an 8 percent gain in October. Imports fell 14.9 percent compared with a 10.3 percent gain in October.
South Korea's income account, which tracks the flow of interest payments, investment income and wages, posted a surplus of $720.2 million last month.
The deficit on the services account, which measures the international flow of travel, transport costs and royalties, widened to $130 million from $54.8 million.
The capital account, a measure of total inflows and outflows of international investment, recorded a deficit of $12.14 billion last month, narrowing from October's shortfall of $24.83 billion.