S.Korean exports surge, short-term debt lowest since 2006

S.Korean exports surge, short-term debt lowest since 2006
Business & Markets 2013
Written by Reuters
Wednesday, 21 August 2013 11:24
SEOUL (Aug 21): South Korea's exports surged 15.6 percent annually in the first 20 days of August, while short-term external debt fell to a 6-1/2 year low, data released on Wednesday showed, helping to explain how its economy has avoided the battering other emerging markets suffered in recent months.

Short-term external debt fell to $119.6 billion at end-June from $122.2 billion three monthes earlier. It was the lowest since end-2006, and at 29.1 percent it was the lowest ratio to total external debt since the third quarter of 1999.

Speaking after the data was released, Finance Minister Hyun Oh-seok said strong economic fundamentals had shielded South Korean markets from the market turmoil seen elsewhere.

The prospects that the U.S. Federal Reserve will begin tapering its easy money policy has put many emerging markets in a spin since May.

Hyun said the authorities would closely monitor external conditions, especially how and when the Fed starts tapering its bond-buying stimulus.

"Though the situation remains to be seen, it appears that (South Korean markets) are being treated differently," Hyun told reporters after a weekly policy meeting.

While countries with vulnerable balance of payments positions, like India and Indonesia, have suffered sustained capital outflows that have put their currencies under pressure, South Korea and other North Asian economies have shown more resilience, registering some capital inflows.

Investors are banking on their export-driven economies benefitting from a recovery in the United States and Europe.

The strong export numbers released by the Korea Customs Service for the first 20 days of August bolstered the Bank of Korea's forecast that sequential growth in the current quarter will accelerate further from the seasonally adjusted 1.1 percent rise estimated for the April-June period.

"Unlike June, when South Korea saw foreign capital outflows along with other emerging economies, foreign capital is flowing into local markets because of the possibility that South Korea will ultimately benefit from a recovery in advanced economies," Hyundai Securities economist Lee Saang-jae said in a report.

The won currency recovered from a two week low hit on Tuesday to stand at 1,119.7 against the dollar as of 0303 GMT, and while it has fallen by more than 4 percent against the dollar so far this year, the extent of its decline have been far less than those of currencies in South East Asia and South Asia. - Reuters