Despite the record surplus and exports surge streak, overwhelming demand for oversea stocks – mostly in Wall Street – by South Koreans posed as structural setback for the recovery in the Korean won.
According to Bank of Korea (BOK) data Friday, the March current-account surplus sharply widened from $23.19 billion in February and from $9.58 billion a year earlier, extending the surplus streak to 35 consecutive months. The first-quarter surplus of $73.78 billion compared with $19.49 billion during the same period last year.
The goods account posted a record $35.07 billion surplus in March, widening from $23.36 billion in February and $9.69 billion a year earlier, as exports jumped 56.9 percent on-year to $94.32 billion. Imports also increased 17.4 percent to $59.24 billion, accelerating from the 4 percent gain recorded in February.
The AI-fueled semiconductor cycle remained the overwhelming engine. Semiconductor exports soared 149.8 percent on a customs-clearance basis in March following a 157.8 percent jump in February, while electric and electronic product exports surged 112.7 percent after rising 104.7 percent a month earlier. Information-technology device exports climbed 78.1 percent.
Regional demand strengthened across nearly all major markets. Exports to China rebounded 64.9 percent on-year in March from a 34.2 percent rise in February, while shipments to Southeast Asia accelerated to 68 percent growth from 54.9 percent. Exports to the United States climbed 47.3 percent and exports to the European Union rose 19.3 percent.
Petroleum product exports swung to a 69.2 percent gain from a 0.7 percent decline in February as refining margins improved despite Middle East tensions. Chemical exports rebounded 9.1 percent after falling 7.1 percent, while shipbuilding exports extended gains by 11.4 percent. By contrast, machinery and precision instrument exports slipped 0.2 percent and auto parts exports declined 5.3 percent.
Imports also accelerated as Korean firms continued expanding AI-related production and facilities. Capital goods imports rose 23.6 percent in March from 16.8 percent in February, while semiconductor imports accelerated to 34.5 percent growth from 19.1 percent. Imports of semiconductor-manufacturing equipment increased 6.7 percent.
Raw material imports returned to growth, rising 8.5 percent after declining 1.9 percent in February. Non-energy imports surged 18.7 percent, while energy imports still fell 5.6 percent despite elevated geopolitical tensions surrounding the Strait of Hormuz.
The services account remained in deficit for a 46th consecutive month at $1.29 billion, improving from a $1.86 billion shortfall in February. The travel account swung to a $140 million surplus from a $1.26 billion deficit a month earlier as outbound travel demand softened. Primary income surplus widened to $3.58 billion from $2.48 billion on increased dividend income from overseas assets.
Still, the historic trade and current-account boom continues to fail to generate meaningful support for the Korean won as capital flows increasingly move in the opposite direction.
Korean investors’ appetite for U.S. technology and AI-related equities remained intact, although sharply eased from the previous months amid strong U.S. dollar and capital reshoring incentives.
March financial-account data showed foreign portfolio investment liabilities — foreign investment into Korean equities and bonds — plunged by $34.04 billion following an already sharp $11.94 billion decline in February. The outflow was overwhelmingly driven by foreign net selling of Korean stocks, with equity investment liabilities alone sinking $29.33 billion after falling $13.27 billion a month earlier.
At the same time, Korean residents continued pouring money into overseas markets. Portfolio investment assets rose another $4 billion in March, although halved from an $8.64 billion increase in February. Overseas equity investment by residents climbed $3.94 billion during the month, slowing from a gain of $10.39 billion.
The BOK has maintained that the current-account structure remains fundamentally solid and noted that refined-product exports and still-contained energy imports helped cushion the impact of Middle East tensions through March. Still, officials acknowledged that portfolio flows and global risk sentiment are now exerting greater influence on the won than trade surpluses alone.
Whether the record surplus streak will be sustained remains uncertain amid prolonged conflicts in the Middle East that has caused energy shock across manufacturing front.
Copyright ⓒ Aju Press All rights reserved.
