S. Korea's current account surplus hits new record in March

SEOUL, April 29 (Yonhap) -- South Korea posted a record current account surplus in March as imports declined more sharply than exports and is likely to see another surplus for April, the central bank said Wednesday.

The current account surplus widened to US$6.65 billion last month from $3.56
billion in February, the Bank of Korea (BOK) said in a report. The current
account is the broadest measure of cross-border trade.
The size of the March surplus was bigger than a central bank forecast and the
largest since January 1980 when the BOK began to compile related data. It is also
expected to help further stabilize the local currency, which rose almost 11
percent to the greenback in March alone.
The BOK predicted that although dividend payouts will likely increase the deficit
in the income account and eased weakness in the local currency could prompt
people to spend more on overseas travel, the country would log another current
account surplus for April.
"As the trade surplus is expected to reach about $4 to 5 billion, the country is
likely to post a current account surplus of around $3 billion for April," Lee
Young-bog, head of the BOK's balance of payments statistics team, told a press
conference.
But Lee warned that it is too early to say whether the country's current account
will maintain its surplus at this point. He did note that a sharp decline in
exports has moderated, helping the current account continue its black-ink streak
since February.
Helped by the March surplus readings, the Korean currency closed at 1,340.7 won
to the dollar, up 1.2 percent from the previous session.
The goods balance posted a surplus of $6.98 billion in March, compared with a
revised $3.11 billion surplus the previous month. The country logged a record
goods balance surplus last month as imports declined more sharply than exports.
Overseas shipments declined 17.8 percent on-year to $30.4 billion last month and
imports plunged 35.8 percent to $23.4 billion.
The income account, which tracks wages for foreign workers and dividend payments
overseas, logged a deficit of $215.7 million last month, a turnaround from a
revised $484.6 million surplus a month earlier, due to dividend payouts by local
companies to foreign investors.
The capital account, which tracks cross-border investments, posted a net outflow
of $2.18 billion last month, compared with a net outflow of a revised $2.98
billion a month earlier.
Analysts say as the country's record current account surplus resulted from the
won's weakness and slumping demand, it is premature to say that South Korea will
continue to see a monthly surplus down the road.
"If the won sharply gains strength per the greenback, the size of the current
account surplus will likely decrease as the service account shortfall widens,"
said Song Tae-jeong, an economist at Woori Finance Holdings.
But they noted the surplus will help stabilize the local currency market by
quelling concerns over dollar shortages.
"The data will help support the Korean currency," said Go You-sun, an economist
at Daewoo Securities Co. "Although the capital account registered a net outflow,
the size was not that large, giving some relief to the country's foreign exchange
reserves."
The central bank said in early April that Korea is forecast to post a current
account surplus of around $18 billion this year, down from a previous estimate of
$22 billion. The government predicted that the surplus will likely reach around
$16 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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