S. Korean bonds strengthen as exports fall for 19th consecutive month

South Korean exports fell more than expected during the month of July, undermining the difficulties policymakers face in the country, despite efforts to use monetary and fiscal policies to in order to boost growth. However, the government is hopeful of a rebound in exports during the second half of this year.

Exports in South Korea fell 10.2 percent, higher than the forecasted 6.7 percent fall, data released by the Ministry of Trade showed Monday. The drop recorded the 19th consecutive month of fall and larger than the most pessimistic projection by economists, Bloomberg reported.

In addition, imports fell 14 percent, compared to an estimate of -10.5 percent; trade surplus fell to USD7.8 billion, down from record USD11.5 billion in June. Although the decline in exports was wider than market expectations, this should not be considered as a deterioration from the previous month as there were fewer working days than in July last year, and per-day exports on average fell less than during January to May, Bloomberg reported, citing Lee Sang Jae, Economist, Eugene Investment & Securities Co. in Seoul, after the release.

Per day exports on average fell 4.4 percent, compared with 0.6 percent drop in June and 10.3 percent drop in May. Exports to Vietnam increased 7.6 percent; to Japan fell 2.1 percent; to the European Union dropped 4.3 percent; to China fell 9.3 percent and to U.S. dropped 14.3 percent.

Meanwhile, current account surplus was at a record high in June, mainly due to a record surplus in the goods trade. However, August trade performance will remain key in monitoring overseas sales, Trade Minister added.