(2nd LD) S. Korea`s current account swings to surplus in Feb.

(ATTN: RECASTS lead, para 4; UPDATES with remarks by BOK official in paras 5-7;
TRIMS throughout)
By Kim Soo-yeon
SEOUL, March 30 (Yonhap) -- South Korea's current account swung to a surplus in
February due to a sharp fall in imports and the country is likely to post a
record surplus for March, the central bank said Monday.
The current account surplus reached US$3.68 billion in February, a turnaround
from a revised $1.64 billion deficit the previous month, the Bank of Korea (BOK)
said in a report. The February figure marked the largest surplus since October
2008 when the current account surplus reached a record $4.75 billion.
South Korea's current account, which measures trade, service and investment flows
between the country and the rest of the world, had been in the black between
October and December.
The central bank predicted that the country is likely to see a considerable
current account surplus for March as the trade surplus will be sizable and
dividend payouts by local firms to foreign investors are not as large as those
seen last year.
"As the country's trade balance is getting better, it is possible that South
Korea could post the biggest current surplus of around $5 billion in history for
March," Lee Young-bog, head of the BOK's balance of payments statistics team,
told a press conference.
In mid-March, the government said South Korea's trade surplus may top a record
$4.5 billion in March thanks to a sharp drop in imports.
But Lee said that it is too early to say whether the current account surplus
represents a broader positive trend, as the weaker won largely contributed to the
switch to the surplus in February.
The report comes as the Korean currency has gained more than 16 percent to the
U.S. dollar since dipping to an 11-year low on March 2.
The local foreign exchange market had been gripped by fears over cash flight by
Japanese investors in March and local banks' dollar shortage woes. But the won
has gained strength to the greenback sharply as the country's trade balance
improves due to a fall in imports and foreign investors buy up Seoul stocks,
prompting more dollars to flow into the export-driven country.
"The switch to the surplus comes as the economic downturn dents demand for
imports and the weaker won discourages people from spending money on overseas
travel," said Kim Jae-eun, an economist at Hana Daetoo Securities Co. "The
country's current account is expected to improve further toward the second half,
giving support to the local currency."
The goods balance posted a surplus of $3.15 billion in February, compared with a
revised $1.74 billion deficit the previous month as imports fell more sharply
than exports. The February readings marked the largest surplus since June 2008.
Overseas shipments declined 19.2 percent on-year to $25.3 billion last month and
imports plunged 30.6 percent to $22.2 billion.
The shortfall of the service account, which includes South Korean spending on
overseas trips, narrowed to $495 million in February, compared with a revised
$708.6 million a month earlier.
The capital account, which tracks cross-border investments, posted a net outflow
of $3.32 billion in February, compared with a net inflow of a revised $5.14
billion a month earlier, as the won's weakness increased losses related to
foreign exchange derivatives and foreigners went on a selling spree of local
stocks.
The central bank predicted in December the country's current account for this
year will remain in the black at around $22 billion. The government has forecast
the surplus will reach around $13 billion.
Last year, the country posted its first annual current account shortfall in 11
years of $6.41 billion as soaring oil prices raised import bills.
sooyeon@yna.co.kr
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