Korea Won Gains After First Current Account Surplus in 7 Months

By Kim Kyoungwha and Judy Chen

July 28 (Bloomberg) -- South Korea's won strengthened after the nation posted a current-account surplus for the first time in seven months in June as exports increased.

The Korean currency has risen 3.9 percent this month, the best performance among the 10 most-active currencies in Asia outside of Japan, as the government bought the won to help curb inflation at a decade high. The won was also supported by oil prices near a seven-week low and demand for the currency from exporters repatriating overseas earnings before the end of the month, Ko Yun Jin, a dealer with Kookmin Bank said.

``Despite steady bids for the dollar from foreign stock sales, the atmosphere is turning favorable for the won,'' Seoul- based Ko said.

The Korean currency rose 0.3 percent to 1,006.55 against the dollar as of 9:20 a.m. in Seoul, compared with 1,009.20 at the end of last week, according to Seoul Money Brokerage Services Ltd.

It gained to as strong as 1,004.90, the highest level since July 16, as the Bank of Korea reported that the current account surplus was $1.82 billion last month, compared with a deficit of $377.5 million in May. The current account is the broadest measure of trade, tracking goods, services and investment income.

The government this month forecast a trade surplus of $3.8 billion in the second half of 2008, led by exports to China and other emerging markets. It posted a trade deficit of $5.7 billion in the first six months.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net;