S Korea's current account surplus drops in Jan. on rising oil prices

13:32, February 25, 2011      

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South Korea's current account surplus decreased in January as rising oil prices resulted in expanded imports, the central bank said Friday.

The current account surplus fell to 230 million U.S. dollars in January, sharply down from 2.11 billion dollars in the previous month, the Bank of Korea (BOK) said.

The January reading marked the smallest surplus since February 2010 when it recorded a current account deficit of 363.1 million dollars.

The current account is the broadest measure of international trade, including goods, services and investment income.

The goods account surplus fell to 1.63 billion dollars in January from 3.68 billion dollars a month earlier, due to an increase in imports resulting from rising raw material prices.

Exports dropped 0.4 billion dollars on-month to 42.7 billion dollars in January, while imports grew 1.7 billion dollars to 41.1 billion dollars, the largest since 41.9 billion dollars marked in July 2008.

Dubai crude, South Korea's standard, closed at 110.77 dollars a barrel Thursday in the spot market, according to the Korea National Oil Corporation. The cost for Dubai crude surpassed a 100- dollar-per-barrel mark on Monday for the first time since September 2008.

The services balance registered a deficit of 1.64 billion dollars in January, up from 1.15 billion dollars in December owing to increased travel abroad taking advantage of the winter school break, the BOK said.

Meanwhile, the capital and financial account, gauging cross- border investments, reached a net outflow of 1.65 billion dollars in January, up from 0.34 billion dollars in the previous month.

Portfolio investment, including stock and bond investment, shifted from December's net outflow of 2.41 billion dollars to a net inflow of 0.9 billion dollars as foreign investors turned to net buyers of local bonds.

Foreigners bought a net 0.63 billion dollars of local bonds in January, a turnaround from net sales of 6.72 billion dollars in December.

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