South Korea’s foreign exchange reserves passed a new milestone of $400 billion thanks to longest-ever trade surplus streak and robust foreign investment in Korean securities, making the national coffer in foreign exchange ninth largest in the world.
According to Bank of Korea on Wednesday, Korea’s FX balance stretched to $400.3 billion at the end of June, up $1.32 billion a month earlier. The figure has touched new highs since March.
By asset type, securities including government, public entity and corporate bonds and asset-backed securities added $1.56 billion to $367.91 billion from May. Cash deposits in foreign bank accounts shrank by $500 million to $22.42 billion. The special drawing rights (SDR) from the International Monetary Fund (IMF) decreased $80 million to $3.26 billion. SDR is an international reserve asset created by the IMF that can be withdrawn by its members in proportion to their quota in the IMF.
At the time Korea had to seek an international bailout due to spillover from Asian currency crisis in late 1997, the country had just $3.9 billion in its FX reserve.
Authorities have been defensive of FX holding ever since. Reserves passed the milestone of $100 billion in September 2001, $200 billion in February 2005, and $300 billion in April 2011.
Under the IMF FX guideline based on economic scale and external debt, $400 million falls in the comfortable level for Korea, said a central bank official.
By Kim In-oh and Cho Jeehyun
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