February 27, 2009

S. Korean current account in red ink

South Korea's current account fell short in January due to a sharp decline in exports, the Bank of Korea said.

The current account, which measures trade, service and investment transactions between South Korea and other markets, reached a $1.36 billion deficit in January, a sharp about face from December's surplus of $860.8 million, Yonhap reported Friday.

The deficit has already impacted currency rates with the won hitting an 11-year low against the U.S. dollar Friday. Trading at 1,534 won to the dollar, the won has fallen 17.9 percent against the dollar this year, the report said.

But, the central bank predicted the current account would quickly return to a surplus.

If South Korea's trade surplus reaches $3 billion in February, it is possible that the country will see a current account surplus of $3.5 billion, said Yang Jae-ryong, head of the Bank of Korea's balance of payments statistics team at a news conference.