The South Korean won advanced sharply to the U.S. dollar on Friday, hitting a fresh yearly high as the country’s current account surplus widened to a seven-month high in May.

The local currency was quoted at 1,014.30 won as of 11 a.m., up 1.90 won from the previous session’s close.

The country’s current account surplus reached $9.3 billion last month, compared with $7.12 billion in April, according to preliminary data by the Bank of Korea. The current account is the broadest measure of cross-border trade.

The May figure, without seasonal adjustments, marks the highest level since October last year when the country’s current surplus soared to a record high of $11.11 billion.

The monthly data was widely expected as Asia’s fourth-largest economy has been logging a surplus for more than two years since March 2012.

“The current account surplus data is adding to pressure on the won’s rise,” said Son Eun-jung, an analyst at Woori Futures.

The local currency has already gained some 12 percent against the greenback in the past year, and the gain has further accelerated in recent months. This year, the won advanced some 5 percent to the dollar.

The strengthening won could become a headache for South Korean policymakers as it could hurt exporters’ profitability by cutting their price competitiveness in overseas markets.

Many policymakers, however, seem to be accepting the won’s strengthening, and are just hoping for the rate of increase to ease.

Last month, BOK Gov. Lee Ju-yeol said the firming won has positive impacts on local domestic demand, although it could have the opposite effect on exports.

A central bank is normally forced to cut rates when a currency rises sharply. But the South Korean central bank is cautious about doing so as the economy is on a recovery track and inflation is gathering pace.

South Korea’s consumer prices grew 1.7 percent on-year in May, the fastest on-year rise since October 2012, when they advanced 2.1 percent, according to a report by Statistics Korea.

South Korea’s central bank froze the key interest rate for the 13th consecutive month on Thursday as it measures risk factors at home and abroad amid the country’s moderate recovery trend.

The central bank kept the benchmark seven-day repo rate at 2.5 percent as widely expected. (Yonhap)