Roundup: S.Korea keeps longest current account surplus for 42 months

South Korea maintained the longest monthly trend of current account surplus for 42 months in a row, but it came on the back of faster decline in imports than exports, bolstering worries about the so-called recession-type surplus, central bank data showed Friday.

Current account surplus, the broadest measure of cross-border trade and capital flow, was 8.46 billion U.S. dollars in August, staying in the black for 42 months since March 2012, according to the Bank of Korea (BOK).

Worries remained that the surplus trend came from faster fall in imports than exports. Amid the sluggish exports, the increase in current account surplus put upward pressures on the South Korean currency to the U.S. dollar.

Compared with the European single currency and the Japanese yen, the South Korean won remained appreciated versus the dollar, weakening price competitiveness of local exporters like Hyundai Motor and Samsung Electronics.

Exports, which account for around half of the economy, tumbled 11.7 percent from a year earlier to 43.18 billion dollars in August, and imports plunged 17.7 percent to 34.21 billion dollars.

It resulted in 8.97 billion dollars of trade surplus for goods, topping the amount of the current account surplus.

Service account balance, which measures the flow of travel, transport costs and royalties, posted a deficit of 1.34 billion dollars in August, down from a 1.92 billion-dollar deficit the previous month.

Among the service account items, the travel account deficit amounted to 1.06 billion dollars in August, compared with a deficit of 0.77 billion dollars in August last year. It reflected the lingering negative effect from the Middle East Respiratory Syndrome (MERS) outbreak.

Primary income surplus, which includes monthly salaries and investment income, declined from 1.28 billion dollars in July to 0. 91 billion dollars in August amid a fall in interest income from overseas.

Financial account, which gauges cross-border capital flow without transactions in goods and services, logged an outflow of 9. 12 billion dollars in August, down from an outflow of 10.21 billion dollars in July.

Outflow in direct investment expanded from 0.12 billion dollars in July to 0.42 billion dollars in August as foreign investors reduced investment into South Korea.

Outflow in portfolio investment, which includes stock and bond transactions, declined from 7.15 billion dollars in July to 2.35 billion dollars in August thanks to a turn into an inflow for overseas securities investment by domestic residents.

Overseas securities investment by local residents posted an inflow of 1.39 billion dollars in August, the first inflow in four years since October 2011. The residents refrained from purchasing foreign stocks amid the rising volatility in the global financial market.

Outflow in other investment account, including trade credit and foreign debts, increased from 2.95 billion dollars in July to 8.53 billion dollars in August due to a gain in foreign currency lending by local financial institutions. Endi