South Korea's current account posted its second-largest surplus on record in April, while the cumulative surplus from January through April surpassed $100 billion. Typically, a larger current account surplus increases the dollar holdings of exporters and other firms, putting downward pressure on the won-dollar exchange rate, or strengthening the won. Recently, however, dollars earned by exporters have not flowed back into the market, prompting analysts to warn of a growing mismatch across the broader economy.
According to preliminary balance of payments data released by the Bank of Korea on Thursday, the current account surplus reached $28.29 billion (about 43.4 trillion won) in April. The figure was the second-largest on a monthly basis, after this March's $37.93 billion.
The cumulative current account surplus over the first four months of this year totaled $102.67 billion, 4.3 times the $24.0 billion recorded in the same period last year. In just four months, it has already exceeded the 2024 full-year surplus of $99.97 billion and is closing in on last year's record surplus of $123.05 billion. The result reflects the top three monthly surpluses on record being concentrated between February and April this year.
"Compared with the current accounts of major countries, the first-quarter surplus of $74.4 billion was the second-highest after China," said Yoo Sung-wook, head of the Bank of Korea's financial statistics division. "Last year, Korea ranked fifth, behind China, Germany, Japan and Taiwan, but in the first quarter of this year it moved ahead of Japan, Taiwan and Germany."
By category, the goods balance, which accounts for the largest share, posted a surplus of $33.88 billion, marking the second-largest on record after the previous month's $35.68 billion. The result was driven by a sharp rise in exports, led by semiconductors. Exports rose 54.5% from a year earlier to $90.59 billion, while imports increased 16.1% to $56.7 billion.
Some forecasts suggest the May current account surplus could exceed this March's record high. Semiconductor exports surged again in May, and with the disappearance of the seasonal factor of foreign dividend payments, the primary income balance is also expected to turn to a surplus. According to the Ministry of Trade, Industry and Energy, semiconductor exports reached $37.16 billion in May, far exceeding the previous high of $32.8 billion in this March.
Despite the improving current account, the won-dollar exchange rate has been rising sharply, and the past formula of "current account surplus equals stronger won" no longer appears to hold. Experts point to changes in the supply and demand of large exporters as the main factor. Rather than converting their export earnings into won in the market, more firms are accumulating dollars and reinvesting them in foreign currency deposits or overseas. "If the trend of exporters delaying currency conversion strengthens further, the upper limit of the exchange rate could climb even higher," a banking industry official said.
