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(Updates with economist comment in fourth paragraph.)
July 28 (Bloomberg) -- South Korea’s current-account surplus rose to an eight-month high in June as global demand for cars and steel bolstered exports, putting pressure on the won to strengthen further.
The surplus was $2.99 billion, compared with a revised $2.18 billion in May, the Bank of Korea said in a statement in Seoul today. The current account is the broadest measure of trade, tracking goods, services and investment income.
The Bank of Korea raised its forecast for this year’s current-account surplus to $15.5 billion from $11 billion on July 15, citing strong export growth and stabilizing raw material costs. Goldman Sachs Group Inc. said July 19 that the won may keep appreciating as the government seeks to damp inflation and exports benefit from a recovery in Japan and a “moderate” acceleration in U.S. growth.
“The sizable current-account surplus should add more pressure on the won, which is already rising fast,” said Kong Dong Rak, a fixed-income analyst at Taurus Investment & Securities Co. in Seoul. “The export outlook looks firm but a possible global economic slowdown should deal a blow.”
South Korea’s currency climbed to its strongest level in almost three years against the dollar yesterday, pushed up by overseas investors’ purchases of the nation’s assets. The won has gained about 7 percent so far this year, the most among major Asian currencies.
The won fell 0.3 percent to 1,052.93 per dollar as of 11:18 a.m., according to data compiled by Bloomberg. South Korea’s currency rose to as high as 1,048.30 yesterday, the strongest level since August 2008. The Kospi share index fell 0.9 percent.
The stronger won hasn’t stopped carmakers from projecting higher overseas sales. Hyundai Motor Co. and Kia Motors Corp. aim to increase U.S. sales by 18 percent to 1.06 million vehicles this year, the companies said last month. Hyundai, South Korea’s largest car maker, will announce second-quarter earnings today.
South Korea’s Posco, the world’s third-biggest steelmaker, posted a 22 percent gain in second-quarter profit, aided by higher prices and earnings from its units.
The advances in the won may help ease inflation pressure, which the Bank of Korea has tried to contain by raising interest rates three times this year. The central bank kept the benchmark interest rate unchanged at 3.25 percent this month. Governor Kim Choong Soo’s policy board meets August 11 to decide whether to raise borrowing costs again.
Total exports on a customs-cleared basis rose 13.6 percent last month from a year earlier, compared with a revised 22 percent gain in May, according to today’s statement. Imports climbed 27.5 percent after expanding a revised 30.1 percent.
“Exports will likely stay strong in the second half as Japan is still struggling with the aftermath of the earthquake, giving additional chances to Korean exporters worldwide,” Kim Young Bae, a director-general at the Bank of Korea, told reporters in Seoul today.
Overseas shipments probably gained 19 percent this month after expanding in June at the slowest pace since October 2009, according to the median forecast of five economists surveyed by Bloomberg News. The latest monthly trade data will be released on Aug. 1.
The surplus on traded goods widened to $3.66 billion last month from a revised $1.63 billion in May, today’s report showed. The services account, which measures the flow of travel, transport costs and royalties, posted a deficit of $632 million in June, compared with a revised surplus of $16 million in May.
--Editors: Ken McCallum, Lily Nonomiya
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