UPDATE 1-S.Korea expects $2.5 bln trade surplus in Feb

(Adds trade figures between Feb 1-20, details)

SEOUL Feb 22 (Reuters) - South Korea said it expects a surplus trade balance of around $2.5 billion in February from a deficit of $3.36 billion in January, due to weaker imports.

Exports by Asia's fourth-largest economy are set to drop by less than 20 percent in February over a year ago after posting a record 33.8 percent loss in January, the Ministry of Knowledge Economy said in a statement on Sunday.

It did not give an expected growth rate for imports.

The country's exports edged up 0.4 percent in the first 20 days of February from a year ago to $17.79 billion, while imports slid 23.2 percent to $16.86 billion, producing a $0.93 billion surplus, the ministry said.

A weaker won currency KRW=, an increase in deliveries by ship builders and more business days in February helped both exports and trade account improve, the ministry said in a statement.

The won fell for nine consecutive sessions to trade near an 11-year low set in November last year, bolstering price competitiveness of domestic companies in overseas markets.

Yonhap news agency quoted South Korean foreign exchange officials as saying the country may use some of the foreign reserves to shore up the tumbling unit. [ID:nSEO282333]

The fall in the local currency, along with healthy shipments of vessels, are expected to help the country post a trade surplus in March, the ministry added without providing details.

It said a drop in imports during the first 20 days of February was due to weaker domestic demand and lower raw material prices.

In January, the country's exports totalled $21.37 billion and imports slid 31.9 percent to $24.72 billion from a year ago, resulting in a $3.36 billion deficit, revised official figures showed earlier. (Reporting by Cheon Jong-woo and Yoo Choonsik; Editing by Anshuman Daga)