Current account sees record surplus

Korea saw its highest-ever monthly current account surplus in June, Bank of Korea data showed on Monday.

The excess in the broadest measure of trade was $12.2 billion in June, the 39th monthly surplus, according to the central bank. This also makes the first half’s current account surplus $52.3 billion, up 33 percent year-on-year.

Details showed that exports of goods in June totaled $49.3 billon and imports $36.1 billion, down 2 percent and 17.3 percent year-on-year, respectively.

In the first half, exports recorded $278.9 billion over imports of $218.8 billion, down 10.6 percent and 18.3 percent from a year earlier.

Low energy prices contributed significantly to the surplus.

The value of crude oil imports fell nearly 41 percent to $28.7 billion during first six months of this year, compared with $48.4 billion during the first half of 2014.

“Low energy prices have helped imports see a double-digit percentage fall, and this in turn has helped increase the surplus,” said Hwang Sang-pil, the central bank official in charge of major economic statistics.

The service account declined as the outbreak of Middle East respiratory syndrome (MERS) dealt blows to tourism and other related industries. The account showed a deficit of $2.5 billion, ballooning from the previous month’s $400 million.

Primary income was in surplus of $1.68 billion thanks to a rise in dividend incomes. This is also up from the $290 million recorded in May.

In financial accounts, there was an outflow of $10.5 billion from the previous month’s $8.8 billion, making the total outflow for first half $54.2 billion.

Within the financial account, there was direct investments outflow of $5 billion, growing from the previous month’s $1.2 billion outflow as foreign direct investment saw a net outflow and an increase in direct overseas investments by domestic investors.

Securities investments also saw a net outflow of $6.5 billion on net selling of local securities by foreign investors.

Derivatives also saw a net outflow of $240 million.

After the report, the won gained for the first time in three days, advancing 0.4 percent to close at 1,165.90 a dollar in Seoul. It had gained as much as 0.7 percent during earlier trade.

A gauge of the dollar fell Friday after a report showed U.S. workers’ pay rose at the slowest pace on record, which casts doubt on whether the Federal Reserve will raise interest rates as early as September.

“The current-account surplus looks solid, suggesting there’ll be more dollar supply,” said Park Dae-bong, a currency trader at Nonghyup Bank in Seoul.

“Foreign investors accelerated the won’s rise by paring bets on dollar strength.”

The greenback’s 14-day relative strength index versus the won was at 70 on Friday, a level that signals it may have climbed too rapidly, too soon. The level was at 65.4 on Monday. National Australia Bank recommended closing long dollar six-month positions against the won at 1,167.6.

Exports from Korea declined 3.3 percent in July from a year earlier, while imports fell 15.3 percent, according to data from the Trade Ministry on Saturday.

The nation’s current account will continue to be in surplus for some time, BOK Director Park Seung-hwan, told reporters.

Government bonds rose, with the yield on notes due June 2025 declining two basis point to 2.4 percent, Korea Exchange prices show.

The three-year yield was unchanged at 1.77 percent.

BY PARK JUNG-YOUN AND BLOOMBERG [park.jungyoun@joongang.co.kr]