South Korean exports in January grew more than expected despite a slowing U.S. economy but firmer oil prices pumped the trade deficit up to the biggest in 11 years, data showed on Friday, dealing a blow to the won.
Exports jumped 17.0 percent, more than market expectations in a Reuters poll anticipating a 16.0 percent annual gain, led by oil products, flat-screen panels, machinery and mobile phone handsets, the Commerce Ministry data showed.
But a larger 31.5 percent rise in imports -- led by crude oil and topping market expectations for a 24.5 percent gain -- pushed the trade deficit up to its widest since early 1997, forcing the won to give up gains and weaken against the dollar.
Economists said exports by Asia's fourth-largest economy would inevitably cool off later this year due to the spreading impact from the U.S. economic slowdown.
"The outlook for the next months is uncertain as the woes in the U.S. economy are likely to have an impact from March-April," said Chang Hwa-tak, an economist at Dongbu Securities.
Economists said South Korea's longstanding efforts to diversify its export markets away from the United States into emerging economies had helped the country maintain strong sales abroad until now, despite troubles in the world's top economy.
Exports in January amounted to a provisional $32.86 billion on a customs-clearance basis and imports totaled $36.24 billion, generating a deficit of $3.38 billion, the data showed.
The import growth was at its fastest pace since a 33.8 percent annual gain in August 2004 and the trade deficit was its biggest since a $3.48 billion gap in January 1997.
The won was trading at 944.1/8 per dollar in the Asian session, turning weaker from an earlier rise to as high as 941.6.
Stock and bond markets shrugged off the numbers, as investors braced for even more data ahead that will show the country's export-led economy would start taking a hit from the U.S. and subsequently global economy's slowing.
South Korea is the region's first major economy to release trade data each month, making the country's trade figures an important clue on the latest state of global demand.
The trade data came hours before the South Korean government is due to release January consumer inflation data. Both sets of numbers will provide an important feed into the Bank of Korea's interest rate review on Feb. 13.
South Korea sends two-fifths of its total exports to China and the United States, while electronics goods and cars account for about 45 percent of the total exports in value.