South Korea’s foreign exchange reserves hit a fresh record high of $410.75 billion last month, having gained $3.44 billion on-month due to a weak dollar trend, the nation’s central bank said Friday.
“Profits and investment returns from foreign assets coupled with the weak dollar trend translating into a higher dollar-converted value of other currencies contributed to the gain,” A Bank of Korea official said.
Korea’s forex reserves have increased for three consecutive months following the COVID-19 outbreak here, with it having gained $3.77 billion in April and $3.33 billion in May. The reserves shed $9 billion in March.
By types of reserves, securities such as government bonds and corporate debts increased by $6.88 billion on-month to $372.58 billion.
Deposits held in foreign currencies shrunk by $3.97 billion to $26.04 billion in the cited period, while special drawing rights, which operates as a supplement to existing money reserves of International Monetary Fund member nations, inched up $260 million to $4.25 billion on-month.
Its gold holdings remained flat at $4.79 billion.
Korea ranked No. 9 among global economies in terms of the size of foreign reserves, as of June, the BOK said. China remained on top with $3.1 trillion and Japan and Switzerland ranked No. 2 and No. 3 with $1.38 trillion and $912 billion, respectively.
Last month, the BOK said it would launch a US dollar funding scheme for local insurers and brokerages using forex reserves, to create for cushion for their liquidity risks.
Short-term dollar loans would be offered through repurchase agreements, swapping US treasuries for dollar cash via auctions, under the scheme.
By Jung Min-kyung (firstname.lastname@example.org