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Drop ends as S. Korea forex reserves up
Source: Agencies |
January 6, 2009, Tuesday
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SOUTH Korea's foreign currency reserves rose slightly in December, ending an eight-month drop caused by the global credit crunch, as the value of the euro and other currency holdings rose on a weaker United States dollar, the central bank said yesterday.
The reserves totaled US$201.22 billion at the end of December, up US$720 million from the end of November, the Bank of Korea said in a statement. It marked the first rise since March.
The main reason for the rise was that the value of the reserves denominated in euro and other currencies gained as they firmed against the US dollar, the central bank said.
Also helping was the use of greenbacks the country brought from the United States under a currency swap agreement, the central bank said. Under the swap deal announced in October, South Korea can get access to up to US$30 billion until April 30, 2009.
Of it, the country made use of US$10.4 billion in December, saving the nation from using its own foreign currency reserves, it said.
From April, the reserves fell as the central bank apparently used the cash to sell US dollars and purchase won to support the local currency, which has fallen sharply against the greenback as foreign investors have fled South Korean stocks at a record pace.
Foreign currency reserves are a key buffer for a country facing economic turmoil because they can be used to defend its currency, provide liquidity and generally shore up a country's financial system. The government has touted reserves as its best defense against a repeat of the 1997-98 Asian financial crisis.
At the end of November, South Korea's reserves were the world's sixth largest. The statement did not provide a ranking for December.
The reserves totaled US$201.22 billion at the end of December, up US$720 million from the end of November, the Bank of Korea said in a statement. It marked the first rise since March.
The main reason for the rise was that the value of the reserves denominated in euro and other currencies gained as they firmed against the US dollar, the central bank said.
Also helping was the use of greenbacks the country brought from the United States under a currency swap agreement, the central bank said. Under the swap deal announced in October, South Korea can get access to up to US$30 billion until April 30, 2009.
Of it, the country made use of US$10.4 billion in December, saving the nation from using its own foreign currency reserves, it said.
From April, the reserves fell as the central bank apparently used the cash to sell US dollars and purchase won to support the local currency, which has fallen sharply against the greenback as foreign investors have fled South Korean stocks at a record pace.
Foreign currency reserves are a key buffer for a country facing economic turmoil because they can be used to defend its currency, provide liquidity and generally shore up a country's financial system. The government has touted reserves as its best defense against a repeat of the 1997-98 Asian financial crisis.
At the end of November, South Korea's reserves were the world's sixth largest. The statement did not provide a ranking for December.
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