The BOK is likely to lower its growth forecast for this year from the current 1.6% next month. Growth in the trade-dependent economy continues to slow. SLOWING GROWTH, WIDENING RATE DIFFERENTIALS Port of Busan, South Korea’s trade hub (Courtesy of News1) The country last reported a current account shortfall two months in a row in February 2012. South Korea’s current account logged a deficit in February for the second straight month.
“The won could depreciate further if China’s economic recovery is weaker than expected and various geopolitical tensions intensify,” said Park Sang-hyun, an economist at HI Investment & Securities Co.
The country is home to the world’s two largest memory chipmakers – Samsung Electronics Co. That ramped up the shortfall to $26.6 billion so far this year, more than half the total deficit of $47.8 billion in 2022.Įxports of semiconductors, the country’s top foreign sales item, tumbled 39.3%, while shipments to China, South Korea’s largest overseas market, skidded 26.8% during the April 1-20 period. The country is poised to extend a monthly trade deficit spree to 14 months in April as exports in the first 20 days of this month dropped 11% to $32.4 billion from a year earlier, resulting in a shortfall of $4.1 billion, according to customs data released on Friday. The South Korean currency has been under pressure from deteriorating economic fundamentals, especially due to falling exports. “In April, dollar demand usually increases due to corporate dividend payments to foreign investors.”
“The won is likely to soften further to the 1,350 level since it weakened past the support line of 1,320,” said Min Kyung-won, an economist at Woori Bank. In February, the won depreciated 7.4%, the largest loss among 34 currencies, the South Korean central bank’s recent report showed. The unit has lost 4.4% versus the US unit so far this year, becoming the worst performer among emerging Asian currencies, even as the dollar index, which tracks the currency’s value against a basket of six major counterparts such as the euro and yen, slid 1.2%.
29, 2022, before the domestic foreign exchange authorities were spotted selling the greenback for intervention to prop up the South Korean currency. The won on Thursday lost as much as 0.5% to 1,332.3 per dollar, its softest since Nov. The South Korean won fell to the weakest level in almost five months, underperforming other currencies despite a softer dollar, as sluggish fundamentals of Asia’s fourth-largest economy amid a sustained drop in exports added to the bearish outlook on the local unit.
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