SEOUL, KOREA - The current account surplus for the five-month period between January and May has already reached almost a half of the year's expected figure. But this is not good news in the foreign exchange market as the high surplus is bringing further down the won-dollar exchange rate to make the won stronger against the U.S. dollar.
On June 27 the Bank of Korea announced that the current account balance during the month of May was US$9.3 billion. This is the longest surplus rally for 27 month after a record was set during the Asian Financial Crisis in 1998 and 1999 when the monthly current account surplus ran for 26 months. The cumulative surplus for the year until May was 31.5 billion, accounting for 46.3 percent of the central bank's projected surplus figure for the whole year.
The news of the May current account surplus, released just before the opening of the foreign exchange market on the 27th, pulled down the won-dollar exchange rate to 1,013 won per dollar around the noon from 1,015 won one hour after the market opening. The closing price of 1,013.40 won for the day was the lowest level since August 2008. Comparing to the level at the end of last year at 1,055.40 won, this is down 4.0 percent (42 won).
Market watchers fretted that the downward trend would continue for some time to come. If the won-dollar exchange rate falls to the three-digit level, it would pose a serious challenge to Korean exporters to stay profitable. The central bank, however, is reluctant to intervene in the market as excessive intervention would trigger a protest from the governments of major trading partners such as the United States and Japan.
Source : The Korea Economic Daily
저작권자 © Korea IT Times 무단전재 및 재배포 금지