S Korean exports hit record high on smartphone and car demand Improved demand for smartphones and automotives helped drive South Korean exports to a record high in October, in spite of government concerns about the impact of recent currency appreciation. The country's monthly exports amounted to $50.5bn, 7.3 per cent higher than in the same month a year before, the government said on Friday. This reflected resurgent demand in the US and the European Union, to which exports rose 23.2 per cent and 16 per cent respectively, while sales to China rose 5.5 per cent. The won strengthened 0.1 per cent to trade at Won1060.8 to the dollar following Friday's announcement, adding to gains of more than 7 per cent since the beginning of July. Foreign investors have made heavy purchases of South Korean assets in recent months, attracted by the country's strong current account surplus and robust public finances. In a joint statement last week, the central bank and finance ministry called the recent gains "excessive," promising to curb "herd behaviour" if it continued. October's export data would not necessarily weaken the authorities" concern about the currency, said Kwon Young-sun, an economist at Nomura. "This is not that strong a number - it's still single-digit, and year-to-date export growth is still about 2 per cent from a low base last year," he said. Beyond the effect on exports, he noted, the government was also concerned about an unbalanced flow of investment "that can easily go out of Korea if things turn bad." South Korean authorities regularly intervene in the currency markets to smooth volatility, although this week a US Treasury report to Congress expressed "[concern] at reports Korea is intervening in the market to resist appreciation." The government's sectoral breakdown of exports showed year-on-year growth of 33 per cent in exports of mobile phones, where Samsung Electronics is the world's leading manufacturer. While this was the first full month since Apple's launch of the lower-cost iPhone 5c, analysts say the device is too expensive to make a mark on the fast-growing mid- to low-end smartphone market, where Samsung and a clutch of Chinese competitors account for most of the growth in sales. Other high points included 21 per cent growth in car exports - with particularly strong sales to the US - and 15 per cent in semiconductors, where prices have risen this year as a result of squeezed capacity. Most economists expect the central bank to keep rates on hold at 2.5 per cent for the near future, before rising in the second half of next year provided the economic recovery accelerates. October consumer price inflation, also published on Friday, was low at 0.7 per cent year-on-year - but core inflation, stripping out food and energy, was 1.6 per cent, while consumer price expectations for the next year stand at 2.9 per cent. Meanwhile, a survey by HSBC of South Korean manufacturing conditions in October showed the strongest reading for five months, with the index reaching 50.2. A reading above 50 indicates expansion in the manufacturing sector, while below 50 indicates contraction. Ronald Man, an economist at HSBC, said that the apparent positive momentum reduced the pressure on the government for fiscal stimulus measures. The South Korean data were released around the same time as the purchasing managers" index in China, which showed that the country's manufacturing sector accelerated in October to its strongest reading in 18 months. China's official PMI came in at 51.4 in October, compared with 51.1 in September, according to the China Federation of Logistics and Purchasing.