FX reserves rise in July despite strong dollar

Korea’s foreign exchange reserves gained slightly in July compared to the previous month thanks to increased investment returns.

Foreign currency reserves stood at $403.11 billion as of the end of July, up $40 million from the previous month, according to data from the Bank of Korea (BOK).

The central bank cited an expansion in the profit of foreign assets as the main factor driving the growth.

“The increase was made possible by a rise in profits of foreign assets under management, despite a loss incurred by the strengthened dollar,” the bank said in a statement.

The strong dollar was blamed for reducing the size of foreign reserves earlier this year through May, but the figure rebounded in June.

In July, foreign-denominated securities, which account for more than 92 percent of foreign exchange reserves, experienced a steep fall while foreign currency deposits increased.

The holding of securities lost $1.82 billion to $372 billion against the previous month. Foreign currency accounts, which account for 6.3 percent of the foreign reserves, gained $1.75 billion to $20.2 billion.

The country’s reserve position at the International Monetary Fund also grew $180 million compared to the previous month to hit $26.7 billion.

Gold bullion holdings remained unchanged at $4.79 billion during the same period, the statement said.

Meanwhile, the BOK said Korea was the world’s ninth-largest holder of foreign exchange reserves as of the end of July, after China, Japan, Switzerland, Russia, Saudi Arabia, Taiwan, Hong Kong and India.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]