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The nation's current account is expected to shift into the black in October on the back of an anticipated surplus in the trade balance, according to the Bank of Korea (BOK).

``In October, the current account is likely to post a surplus of between $500 million and $1 billion,'' an official at the Bank of Korea (BOK) said.

``In November and December, the country is expected to post a bigger surplus, and the surplus of the current account is likely to reach $4 billion in the fourth quarter,'' he added.

The shift is expected to help calm the local currency market, which has been extremely volatile on concerns over an acute shortage of dollars here amid widening shortfalls in the current account.

The current account deficit reached $12.59 billion between January and August, putting additional constraint on the local currency. In August, the shortfall reached a record high of $4.7 billion as the goods balance posted the largest shortfall in 12 years.

Battered by the widening shortfall coupled with a dollar shortage, the local currency has lost around 34 percent in value against the dollar since the beginning of this year.

The nation's currency market has tumbled headlong as banks and companies locked up their liquidity and are scrambling to secure dollars on concerns that a liquidity problem will get worse.

``The improvement in the balance of payments is expected to help Korea restore international credibility on the global market, thus facilitating overseas borrowing by local lenders,'' the BOK official said.

The central bank said that the nation is forecast to register an annual current account deficit of about $10 billion, which would mark the first deficit since 1997.

By Kim Jae-kyoung(Staff Reporter)



# The Korea Times [Oct 30, 2008]