May Sees 4th Straight Month of Current Acct. Surplus

The country’s current account last month posted a surplus for the fourth consecutive month but the amount of surplus decreased for the second straight month due to a stronger Korean won.

The capital balance also showed its second-highest monthly net influx in history last month, boosted by increased borrowings by Korean financial institutions.

The Bank of Korea said yesterday that the current account surplus reached 3.63 billion U.S. dollars last month, down from 4.25 billion dollars in April.

The surplus in the goods account was 5.02 billion U.S. dollars last month, but resulted from decreases in both exports and imports. Exports shrank 27.3 percent month-on-month to 30.27 billion dollars in May, lower than the 39.4-percent plunge in exports over the same period.

The shortfall in the service balance widened to 1.47 billion dollars last month from 1.11 billion dollars in April due to a stronger won. The rise in the Korean currency’s value also spurred more cash remittances to overseas accounts, shifting the country’s current transfer account balance from a surplus of 80 million dollars in April to a deficit of 280 million dollars last month.

Net capital inflow reached 6.72 billion dollars last month, up from 2.16 billion dollars in April. The May figure was the biggest inflow since 7.57 billion in November 2004.

A Bank of Korea official cited increases in borrowings by domestic financial institutions and foreign investment in Korean stocks for the black figure in May. The bank predicted a current account surplus of around 20 billion dollars for this year’s first half and a surplus of three billion dollars for June.

jaeyuna@donga.com