South Korea’s foreign currency reserves fell to the lowest level in a year in August due to depreciation in non-U.S. assets versus strong greenback.
According to data released by the Bank of Korea on Wednesday, the country’s foreign currency reserves stood at $401.48 billion at the end of August, down $1.63 billion from a month ago and the lowest since August last year.
The shrink in foreign currency reserves was largely due to the U.S. dollar’s strengthening that pushed down the value of non-dollar denominated foreign assets such as euro and yen held in Korea, said the central bank.
The U.S. dollar index, which measures the value of the U.S. dollar relative to world’s six major currencies - euro, Japanese yen, Canadian dollar, British pound, Swedish Krona and Swiss franc – gained by 0.5 percentage point in August, meaning the dollar turned that much stronger versus others in the currency basket.
The value of foreign securities, including stocks, government bonds and corporate debts, came at $370.99 billion, down $1.03 billion from a month earlier. Cash deposits in foreign bank accounts also fell $580 million to $19.66 billion.
Special drawing rights from the International Monetary Fund (IMF) decreased $10 million to $3.38 billion, and reserve position at IMF was down $10 million to $2.66 billion. Gold reserves, however, were unchanged at $4.79 billion.
Korea remained the world’s ninth largest holder of foreign exchange reserves as of the end of July. China ranked the top with $3.1 trillion, trailed by Japan with $1.32 trillion and Switzerland with $828.8 billion.
By Kim Yeon-joo and Cho Jeehyun
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