South Korea forex reserves dwindle to lowest level in a year

By Park Sae-jin Posted : March 4, 2016, 12:57 Updated : March 4, 2016, 12:57

[Aju News DB]

South Korea's foreign exchange reserves dipped to its lowest level in almost a year in February, central bank data showed Friday, as traders cited suspected dollar-selling intervention by monetary authorities to stem the won's rapid fall.

The foreign exchange reserves fell for a fourth consecutive month to stand at 365.76 billion US dollars at the end of last month, down $1.54 billion from the previous month according to the Bank of Korea (BoK).

The reserves now stood at the lowest since March 2015.

The bank attributed the decline to conversion losses resulting from the weakness in some of the non-dollar currencies such as euro and British pound. The bank did not elaborate on the composition of currency assets.

Traders in Seoul had repeatedly reported during February of suspected dollar selling by the authorities, aimed largely at curbing the won's rapid fall against the dollar.

The won lost three percent against the dollar in February, the biggest drop in seven months. But it staged a rally this month as stabilizing commodity prices encouraged investors to step up purchases of risk assets.

South Korea was the world's seventh-largest holder of foreign exchange reserves at the end of January.

Finance ministry data showed foreign capital outflows from the South Korean securities markets continued for a fourth consecutive month in February.

Foreign investors reduced their holdings of South Korean bonds by a net 4.2 trillion won ($3.46 billion) and sold a net 0.2 trillion won worth of stocks in February. It was the fourth month of net foreign outflows from the country's securities markets.

The ministry said there were some signs of the outflow trend easing, including the fact that the country's bond market had a net inflow during the second half of February after seeing a big outflow in the first half.

The Australian central bank said on Wednesday it had recently invested five percent of its net foreign currency reserves in won-denominated assets as part of efforts to diversify investments.

BY Alex Lee
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