Korea’s foreign reserves fall from record high

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Korea’s foreign reserves fall from record high

The growth of Korea’s foreign exchange reserves moderated in October as the strengthened dollar ended the upward trend that has accumulated record high reserves in recent months.

The Bank of Korea said Thursday that the country’s foreign reserves were $375 .2 billion in October, down $2.6 billion or 0.7 percent from the previous month.

The October figure marks the first downturn in four months.

The BOK attributed the decline to the dollar appreciation that dragged down the value of other foreign currencies.

“Although the profits of foreign assets increased,” said Kim Chung-hwa, a senior economist at the BOK, “the stronger dollar pulled down the value of other foreign currencies, which results in the falling reserve amount.”

For instance, the euro tumbled 2.2 percent against the dollar while the pound lost 6 percent.

Still, foreign currencies have begun rising against the dollar this month, ahead of the U.S. presidential election.

The latest reading is a contrast from the previous month that hit an all-time record at $377.8 billion.

In October, foreign-denominated securities, which account for more than 91 percent of foreign exchange reserves, experienced a steep fall, along with foreign currency deposits.

The holding of securities lost $400 million to $342.3 billion against the previous month. Foreign currency accounts, which account for 6.3 percent of the foreign reserves, fell $30 million to $23.8 billion.

The country’s reserve position at the International Monetary Fund also decreased $30 million compared to the previous month to hit $1.8 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 seventh-largest holder of foreign exchange reserves as of the end of August, after China, Japan, Switzerland, Saudi Arabia, Taiwan and Russia.

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