SEOUL, April 8 (AJP) — South Korea's current account surplus reached a historic monthly high in February, crossing the $20 billion mark for the first time since records began and will stay largely insulated from the Middle East-driven oil and dollar spike at least through March, the central bank said Wednesday.
Bank of Korea (BOK) data showed the February current account posted a record $23.19 billion surplus, surpassing the previous high of $18.7 billion in December and extending the surplus streak to 34 consecutive months — the second-longest on record.
Chip-led goods account drove the outperformance, logging a $23.36 billion surplus, up more than $8 billion from a month earlier and marking another record. The streak in goods surplus extended to 35 months.
Exports remained the core engine. February outbound shipments reached $70.37 billion on a balance-of-payments basis, up 29.9 percent on year — an all-time high for the month.
Semiconductor exports surged 157.9 percent to $25.26 billion, accounting for 37 percent of total exports, while IT devices including mobile phones jumped 67.8 percent.
Shipbuilding exports also rebounded, rising 45.5 percent and snapping a four-month contraction streak.
By contrast, autos and machinery remained soft. Passenger car exports fell 22.9 percent and auto parts dropped 24.4 percent, while machinery and precision instruments declined for another month.
"The fact that the Lunar New Year holiday fell in February this year reduced the number of working days," said Yoo Seong-wook, head of the BOK's financial statistics department. "On a daily average basis, exports actually increased by 14.6% year-on-year and 15.2% month-on-month."
The services account remained in deficit for a 45th straight month, though the gap narrowed to $1.86 billion.
Imports rose 7.5 percent on year to $51.93 billion, with energy demand firm. Gas imports increased 15.6 percent, coal 20.5 percent, and mineral imports 26.7 percent, reflecting both higher volumes and steady industrial demand.
Despite the trade strength, the financial account showed clear strain. Foreign investment liabilities – foreign investment in Korea - fell by $11.94 billion, the steepest drop on record, with equity outflows hitting $132.7 billion — exceeding even the COVID-era selloff.
The “Sell Korea” trend reflects a mix of factors, including concerns over an AI-driven semiconductor bubble and mounting geopolitical risks tied to the Middle East conflict.
While debt securities, including bonds, saw an increase of $1.33 billion, the pace of growth slowed significantly from the $4.47 billion recorded in the previous month. Meanwhile, Korean residents’ overseas investment (portfolio assets) continued to rise, increasing by $8.64 billion, though this was a sharp decline from January’s $13.46 billion.
The central bank expects the current account to remain resilient through March, as oil price increases have yet to fully feed into import costs and refined product exports provide a partial offset.
Still, risks are building. With roughly 70 percent of Korea’s crude imports passing through the Strait of Hormuz, prolonged disruption could sharply raise energy import costs and weigh on the trade balance.
The "Sell Korea" sentiment is expected to have worsened in March as the average exchange rate weakened from 1451 to 1,493 won per dollar - the fourth-weakest on record.
Foreign investors sold 32 trillion won ($21.3 billion) on the benchmark KOSPI in March alone. The bond market also reflected this weakness, with 3-year and 10-year Treasury yields rising to 3.552 percent and 3.879 percent, respectively, - up 16.8 percentage points and 12.6 percentage points from the end of February.
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