Korea’s Trade Deficit Continuing to Increase
The U.S. taper tantrum is affecting South Korean financial markets again. The Korean won-U.S. dollar exchange rate closed at 1,390.9 won on Sept. 14, up 17.3 won from the previous day and the highest since March 30, 2009. The opening exchange rate was 1,393 won and the rate touched 1,395.5 won during the trading session.
That day, KOSPI fell 1.56 percent to close at 2,411.42 points and KOSDAQ fell 1.74 percent to close at 782.93. In the early trading session, KOSPI dropped 2.75 percent to fall below 2,400 points.
In the bond market, the three-year government bond yield rose 4.9 basis points to close at 3.585 percent. Likewise, the 10-year yield rose 3.1 basis points to close at 3.651 percent.
South Korea’s trade deficit is continuing to increase amid the triple whammy on the consumer price, exchange rate and interest rate sides. For the first 10 days of this month, South Korea’s exports fell 17 percent year on year, its imports fell 11 percent, and its trade deficit was US$2.4 billion. The South Korean economy is about to show a trade deficit for the sixth consecutive month. Its trade deficit for the period of Jan. 1 to Sept. 10 this year is US$27.5 billion.