South Korean factory output and domestic business figures showed Asia’s fourth-largest economy held relatively firm in July, but analysts said a slowing global economy and shaky consumer sentiment kept the outlook uncertain.

Treasury bond futures turned lower as these and other figures released on Friday prompted traders to reduce bets on a further tightening in monetary policy soon.

Analysts said the Bank of Korea, which early this month raised interest rates for the first time in a year to contain inflation, will likely keep rates on hold for a considerable time until it becomes more confident where the economy is heading.

“Solid exports likely supported the July output results. Exports can hold up until around September, but there will be a visible slowdown in the fourth quarter as the global downturn spreads,” said Park Sang-hyun, chief economist at CJ Investment & Securities.

Industrial output in July grew 9.1 percent from a year earlier, slightly above market expectations in a Reuters survey for an 8.8 percent gain, and consumer goods sales jumped a seasonally adjusted 4.5 percent in July from June.

Along with these figures, central bank data showing that South Korea posted its biggest current account deficit in six months in July on high oil prices also appeared to be raising chances for an additional interest rate rise.

South Korea’s current account swung to a seasonally adjusted deficit of $1.80 billion in July, the biggest since a $2.19 billion deficit in January, from a revised $159 million surplus in June, the Bank of Korea said early on Friday.

But on a seasonally adjusted basis, industrial output fell 0.2 percent in July from June, missing expectations for a 0.9 percent rise, and the increase in consumer goods only came after three consecutive months of decline, government data showed.

Recently falling oil prices will also persuade the Bank of Korea to hold fire for a while, analysts said.

“The Bank of Korea will likely keep rates steady for now. A rate hike isn’t on the horizon with consumer prices in the coming months expected to be somewhat contained,” said Park at CJ.

Finance Minister Kang Man-soo also said early on Friday the annual consumer inflation rate for August would probably fall below a near 10-year high of 5.9 percent set in July, contrasting with market expectations for an additional pick-up in August.

The Bank of Korea lifted the policy interest rate by a quarter of a percentage point to a 7-1/2-year high of 5.25 percent on Aug. 7 and next reviews the rate on Sept. 11.

Source: http://www.afxnews.com

The South Korean won fell against the dollar on Friday after data showed the country’s current account in July posted its biggest deficit in six months and on importers’ dollar demand for settlements.

The foreign exchange authorities were seen selling dollars to check the won’s <KRW=> falls, traders said, but foreign investors kept unloading Seoul shares, causing currency investors to cover dollar-short positions.

The local currency was quoted at 1,088.7/9.1 per dollar as of 0600 GMT, compared with Thursday’s domestic close of 1,081.8 <KRW=KFTC>.

The won is expected to remain under pressure from concerns over a slowing economy and the credit crisis, although the South Korean unit may find some relief as the authorities are likely to continue to intervene in the market to support the currency, analysts said.

“The question is no longer whether the won will fall to 1,100 (per dollar). What is more important is how much further the won will weaken from that level,” said Lee Tark-koo, a currency analyst at KB Futures Co Ltd.

“Today’s current account data was bad and there is a rumour that trade figures due on Monday would be worse. So we have few reasons to buy the won,” he added.

South Korea’s annual export growth probably slowed in August with a weakening global economy finally taking its toll after a surprisingly strong performance in July, a Reuters poll showed. [ID:nSEO57752]

Th poll suggested the country would post a $1.48 billion trade deficit in August, but some analysts said the shortfall could mount to up to $4 billion.

South Korea’s current account swung to a seasonally adjusted $1.80 billion deficit in July from a revised $159 million surplus in June as the goods account surplus more than halved, central bank data showed. [ID:nSEO68705]

Separately, government data showed industrial output fell 0.2 percent in July from June, missing expectations for a 0.9 percent rise.

Seoul shares <.KS11> ended flat while foreign investors sold a net 246.4 billion won worth of stocks in the country’s main exchange.

They dumped a combined net 2 trillion won in stocks during the previous eight consecutive sessions.

0600 GMT 0300 GMT prev close

Won <KRW=> 1,088.7/9.1 1,086.4/6.7 1,081.8

Yen/won <JPYKRW=R> 9.9835/17 9.9542/15 9.9175/21

KOSPI <.KS11> 1,474.24 1,473.24 1,474.15

Source: http://www.afxnews.com

Hungarian industrial producer prices continued to decrease in July and posted their lowest annual growth rate in 2008, Central Statistics Office KSH figures showed Friday.

Industrial producer prices were down 0.7% on the month and rose 3.7% on the year in July, after a monthly decrease of 0.5% and an annual rise of 4.6% in June. Analysts forecast July producer prices to increase 3.6% on the year in a poll of three economists by Dow Jones Newswires.

Export prices declined both on the month and on the year, while domestic prices rose both on the month and on the year in July.

Export prices were down 2.1% on the previous month and fell 3.4% on the year due to the strong appreciation of the Hungarian forint.

The forint firmed 4.4% against the euro and 5.7% against the dollar in July on a month earlier. On a yearly basis, the Hungarian currency strengthened 6.0% against the euro and firmed 18.3% against the dollar.

Domestic prices posted their highest annual growth rate in 2008. Domestic prices were up 1.2% on the month and 13.3% on the year, while in June they rose 0.7% on the month and 12.1% on the year.

Domestic prices in the manufacturing sector were up 0.7% from a month earlier, boosted by a 3.5% increase in the price of coke and refined petroleum products manufacturing, following international oil price developments, the KSH said.

Prices in the electricity, gas and water supply sector, which accounts for over a quarter of domestic sales, rose 2.2% on the month as a result of an average price hike of 6.1% in state regulated natural gas prices, the KSH added.

On an annual basis, domestic prices in the electricity, gas and water supply sector rose 18.3% in July, the highest level recorded this year.

Within the manufacturing sector, prices of coke and refined petroleum products posted the highest growth rate in July at 34.8%. Food and beverages manufacturing prices were up 12.7% on the year, as were prices for the manufacturing of basic and fabricated metal products as a result of rising global commodity prices.

Prices in the overall manufacturing sector rose 10.9% on the year in July.

Source: http://www.djnewswires.com/eu