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SEOUL -- South Korea's foreign exchange reserves have been on the rise this year, standing at an all-time high of $398.98 billion in May mainly on increased gains from investment in foreign assets, central bank data showed on Tuesday.
The reserves were up $560 million from a month earlier, according to the Bank of Korea (BOK). South Korean foreign reserve holdings rank ninth in the world. The gain was driven by a rise in foreign reserves securities which amounted to $366.35 billion.
South Korean foreign exchange reserves consisted of securities valued at $366.4 billion (91.8 percent), deposits of $22.9 billion dollars (5.7 percent), SDRs of $3.3 billion (0.8%), the International Monetary Fund (IMF) reserve position of $1.6 billion (0.4 percent), and gold of $4.8 billion (1.2 percent).
Foreign exchange reserves are used by authorities to guard against portfolio outflows or other risks that may have a negative impact on the South Korea economy. The BOK has identified improving the operational efficiency of its forex reserve department as a key strategic objective, to ensure the safety of forex reserves while pursuing an investment diversification strategy.
Last year, the BOK sealed a series of currency swap deals with central banks in other countries to strengthen a financial safety net. A currency swap is a tool for defending against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its own currency.
This story was contributed by Jazin Wee, an editorial assistant.