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Foreign reserves down in April for 2nd month on strong dollar

(Yonhap)
(Yonhap)

South Korea's foreign reserves shrank for the second straight month in April as the strong dollar resulted in a fall in converted value of non-dollar holdings and the government unloaded the greenback to defend the local currency, central bank data showed Wednesday.

The country's foreign reserves stood at $449.3 billion as of end-April, down $8.51 billion from the previous month, according to the data provided by the Bank of Korea (BOK).

This marked the second straight month of on-month declines.

The BOK blamed the decline on a fall in the converted value of its non-dollar assets caused by the dollar's ascent and "market stabilization measures," apparently referring to dollar selling to curb the won's depreciation.

To arrest the won's sharp fall, foreign exchange authorities recently carried out "verbal intervention" several times by expressing concerns over market volatility, which was presumed to have been accompanied by unloading of dollar holdings.

The BOK did not provide the amount of dollars sold to stem the won's descent in April.

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

The data showed that foreign securities were valued at $408.83 billion as of end-April, down $1.38 billion from the previous month. The figure accounted for 91 percent of total foreign reserves.

The value of deposits also fell $6.56 billion on-month to $16.25 billion at the end of April, which made up 3.6 percent of the reserves.

South Korea was the world's eighth-largest holder of foreign reserves as of end-March, the BOK said. (Yonhap)

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