S. Korea's current account surplus hits 4-month high in April

  South Korea's current account surplus rose to the highest level in four months in April as robust exports overshadowed an increase in dividend payouts by local firms to foreign investors, the central bank said Friday.

   The current account surplus reached US$1.88 billion in April, up from a revised $1.33 billion the previous month, according to the Bank of Korea (BOK). The current account is the broadest measure of cross-border trade.

   The April surplus was the largest since a $2.11 billion surplus in December last year. The current account remained in the black for the 14th straight month in April, aided by brisk exports, which account for about 50 percent of the South Korean economy.

   The surplus reached a combined $4.49 billion in the first four months of this year. The BOK forecast the current account surplus to reach $11 billion for this year.

   The BOK said brisk exports of cars, ships and petrochemical products increased the size of the current account surplus, offsetting a rise in dividend payouts for offshore investors.

   The central bank said the country's current account balance is expected to remain in the black in the coming months due mainly to robust exports.

   "If exports stay firm this month, the country is forecast to post a similar size of the surplus seen in April," Yang Jae-ryong, director of the BOK's monetary and financial statistics division, said at a press conference.

   The local currency has appreciated more than 4 percent to the dollar since January amid sustained growth of exports and foreigners' stock buying. The surplus is widely expected to add further upward pressure on the won.

   South Korea's goods balance posted a surplus of $3.93 billion in April, up from a revised $2.75 billion in March.

   Exports rose 23.6 percent on-year to a record $48.4 billion last month and imports gained 25.6 percent to $44.5 billion, the central bank said.

   A shortfall in the service account, which includes outlays by South Koreans on overseas trips, narrowed to $178.7 million last month, compared with a deficit of $328 million in March.

   The primary income account, which tracks wages for foreign workers and dividend payments overseas, logged a deficit of $1.58 billion in April, larger than a deficit of $858.4 million in March.

   In March and April, offshore investors usually repatriate dividend payments by Korean companies that close their books in December, sapping the country's income account balance.

   Meanwhile, the capital and financial account, covering cross-border investments, posted a net outflow of $65.7 million in April, compared with a net inflow of a revised $524.1 million the previous month.

   Last month, portfolio investments, including stock and bond investments, logged a net inflow of $4.58 billion, sharply up from

$720.3 million in March on the back of foreigners' buying spree of local stocks and bonds.

   Financial institutions in April repaid short-term overseas borrowing ahead of the government's move to strengthen regulations on banks' foreign exchange derivatives positions.

   In April, short-term borrowing posted a net outflow of $479.5 million, a turnaround from a net inflow of $6.72 billion the previous month. In March, short-term borrowing jumped to the highest level in almost three years mainly because local branches of foreign banks increased borrowing from overseas.

   Last week, South Korea unveiled its plan to further lower the ceiling on foreign exchange derivatives positions held by local and foreign banks by 20 percent in an effort to curb the country's growing short-term debt. The government also plans to impose a levy on banks' non-deposit foreign currency borrowings starting in August.

(Yonhap News)