Home Business Market
2009/12/02 06:00 KST
S. Korea's foreign reserves hit all-time high in Nov.

SEOUL, Dec. 2 (Yonhap) -- South Korea's foreign exchange reserves rose to a record high in November as a weaker U.S. dollar boosted the conversion value of assets in other currencies and investment profits gained, the central bank said Wednesday.

   The nation's foreign reserves totaled US$270.89 billion as of the end of November, up $6.7 billion from the previous month and the ninth straight monthly gain, according to the Bank of Korea (BOK).

   Last month, foreign reserves climbed to the highest level since 1950 when the BOK began to compile related data. The previous highest level was registered in March 2008 when the reserves stood at $264.25 billion.

   Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.

   "The November reading indicated that the role of foreign exchange reserves as a safety valve has been enhanced," Moon Han-geun, an official at the BOK, told reporters.

   "There will be no problem in dealing with potential external shocks given the level of the reserves."

   The upward trend in the reserves comes as the country's current account has remained in the black since February and as foreign investors have snapped up local stocks and bonds, prompting more dollars to flow into the country.

   The November rise came thanks to a mix of favorable factors. The government retrieved about $500 million in maturing dollar funds that it provided to local banks, while the state-run National Pension Service repaid $700 million to the BOK as part of its currency swap arrangement with the central bank.

   Investment profits also gained and a weaker dollar bolstered the conversion value of assets in other currencies like the euro and the yen. Market players speculated that dollar buying intervention also contributed to the November gain.

   The data came as the Korean currency has gained about 35 percent against the greenback since March when it hit an 11-year low. The won tumbled 25.7 percent versus the dollar last year alone.

   South Korea's foreign exchange reserves declined for the eighth consecutive month in November 2008 as foreign exchange authorities unloaded dollar holdings to stem the won's fall and ease the deepening credit squeeze.

   As of the end of October, South Korea was the world's sixth-largest holder of foreign exchange reserves after China, Japan, Russia, Taiwan and India.