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Little Relief For Won In Early May Trade Data

KRW

South Korea's first 10 days trade data for May showed similar trends to last month, with a further easing in export momentum and an on-going trade deficit observed.

  • First 10 day exports were +28.7% YoY, but on a daily average basis it was just +8.9% YoY. Note that for April export growth was +12.6% YoY for the full month. So early trends for May look to be a continuation of the easing trend.
  • The details were mixed, chip exports holding up at close to +11% YoY, but mobile devices declined. Petroleum exports also surged. Export growth was stronger to the US and EU compared with China.
  • Imports increased at a firmer pace, up +34.7% YoY, leaving the trade deficit at -$3.72bn for the first 10 days of the month. This can obviously improve through the course of the month, but the trend still looks an unfavorable one, see the chart below.
  • Spot USD/KRW is slightly higher in early trade, up to 1,279, while the 1 month NDF is just above 1,280, which is above recent cyclical highs. Watch for comments by the authorities around excessive volatility.

Fig 1: South Korean Trade Deficit Remains A Headwind For The Won

Source: MNI - Market News/Bloomberg

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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