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South Korea's February Current Account Swings to Surplus

Reuters
Tuesday, 27 Mar 2007 | 10:22 PM ET

South Korea's current account swung to the second-biggest surplus in 16 months in February from a deficit in January, central bank data showed on Wednesday, providing a potential boost to the won.

The Bank of Korea said the country's current account posted a seasonally adjusted surplus of $1.12 billion in February from a revised $737 million deficit in January, thanks to a more than
doubling in the goods trade surplus.

The surplus in February was the highest monthly reading since a $2.46 billion surplus in November last year and the second biggest since October 2005, data from the central bank shows.

For the first two months of this year, the current account produced a seasonally adjusted surplus of $385 million, compared with a $373 million deficit for the same period in 2006.

The sharp turnaround in the current account could put upward pressure on a won that has been weakening against the U.S. dollar, which would dampen hopes among South Korean policy makers that the won's nine-year rally may have reached its end.

Since the won hit its strongest mark in nine years at 912.6 against dollar on Dec. 7, the South Korean currency has fallen back on expectations the country's current account surplus would
shrink significantly this year.

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