South Korea's current account surplus increased to the highest level in nine months in July as exports hit a record high even amid global economic uncertainty, the central bank said Monday.
The current account surplus reached US$4.94 billion in July, more than doubling from a revised $2.03 billion the previous month, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.
The July surplus was the largest since a $5.11 billion surplus tallied in October last year. The current account remained in the black for the 17th straight month in June on exports, which account for about 50 percent of the South Korean economy.
The cumulative surplus amounted to $13 billion in the first seven months of the year and the central bank revised up its 2011 forecast of the surplus to $15.5 billion.
The surplus is widely expected to add further upward pressure on the local currency, which has appreciated about 5 percent to the dollar since January.
The central bank said the increase in the surplus mainly resulted from brisk overseas shipments of steel and petrochemical products.
South Korea's exports have been firm, withstanding the local currency's continued gains and global economic uncertainty like the eurozone debt crisis. But growing signs of the global economic slowdown are raising fears that Korea's exports may be hurt.
South Korea's goods balance posted a surplus of a record $5.89 billion in July, up from a revised $2.7 billion in June.
Exports grew 20.9 percent on-year to an all-time high of $49.7 billion in July and imports expanded 22.2 percent to $43.8 billion.
The service account, which includes outlays by South Koreans on overseas trips, posted a deficit of $690.9 million last month, compared with a shortfall of $632.7 million in June due to a rise in spending on overseas travel.
The primary income account, which tracks wages for foreign workers and dividend payments overseas, logged a surplus of $72.3 million in July, compared with $239.8 million in June.
Meanwhile, the capital and financial account, covering cross-border investments, posted a net outflow of $3.2 billion in July, similar to a net outflow of $3.22 billion in June, according to the BOK.
Last month, banks paid off their overseas borrowing to meet the tighter rules on banks' currency derivatives positions, posting a net outflow of $4.12 billion, the BOK said. It compared with a net inflow of $1.55 billion in June.
South Korea lowered the ceiling of foreign exchange derivatives positions held by local and foreign banks by 20 percent in a bid to curb growing short-term overseas debt. The move took effect on July 1. (Yonhap News)
