--Surplus in October narrows from September's on increased imports
--Surplus will continue in the coming months, lending further support for the won
--Bank of Korea expects full-year surplus to come well above its forecast of $34 billion
(Adds BOK official's outlook for November and the entire year in the sixth-eighth paragraphs and analyst comment the 12th paragraph.)
By In-Soo Nam
SEOUL--South Korea's current-account surplus narrowed slightly in October from the previous month, but for the first 10 months of the year the surplus surpassed the Bank of Korea's full-year forecast, lending further support for the won--one of the best performers in Asia this year.
The current-account surplus, the broadest measure of South Korea's trade with the rest of the world, totaled $5.82 billion last month, according to central bank data released Wednesday. In September, the country ran a surplus of $5.91 billion, its second-largest on record.
On a seasonally adjusted basis, the current-account surplus widened to $4.42 billion in October from $3.75 billion in the prior month.
The current-account balance remained in the black for the ninth consecutive month for South Korea, which last posted a deficit in January.
South Korea--Asia's fourth-largest economy--has steadily posted a handsome current account surplus every month in the face of external headwinds. In the first 10 months of the year the country ran a surplus of $34.1 billion, surpassing the BOK's full-year forecast of $34 billion, which was revised up last month from an earlier surplus projection of $20 billion.
The central bank expects the country to continue to run a similar surplus in November, bringing the full-year total to well above its forecast.
"The surplus trend is likely to continue for November on the back of growing exports of petrochemical goods and telecommunications products," Yang Jae-ryong, director of the BOK's statistics division, said at a media briefing.
Mr. Yang said exports seemed to recover after remaining weak in the second and third quarters due to a high comparison base last year, when exports got a boost in the aftermath of Japan's earthquake and tsunami.
Backed by continued current-account surpluses and heavy foreign fund inflows, the Korean won has risen about 9% against the dollar from this year's low level in May, prompting the government to take action to slow the pace of won gains.
South Korea's financial authorities Tuesday announced lower ceilings on banks' foreign exchange forward positions, in a bid to rein in the currency as its strength threatens to hurt the nation's critical export industry and attract potentially destabilizing capital inflows. The government warned it could take additional measures if hot money continues to flow into its markets.
Analysts said such moves won't likely reverse the won's upward march because the Korean currency remains undervalued compared with Asian peers such as the yen.
"Cold money inflows--next exports--will exert appreciation pressure for the won. We forecast cold money driving the won-dollar exchange rate to 1,055 by mid-2013," said ING economist Tim Condon.
The won advanced to 1,084.70 early Wednesday, from 1,084.10 late the previous day.
The BOK's data Wednesday showed the goods account had a surplus of $5.21 billion in October, narrower than September's $5.49 billion surplus, weighed by increased imports of capital goods such as machinery and electronics components.
"A pickup in imports of capital goods can be seen as an indicator that investment is recovering," said Mr. Yang at the BOK.
Write to In-Soo Nam at email@example.com
(END) Dow Jones Newswires
November 27, 2012 21:41 ET (02:41 GMT)
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