Koreas Forex Reserves Stay Above $200 Bil.

South Korea's foreign exchange reserves inched down in February due to a stronger U.S. dollar, but managed to stay above the psychologically important $200 billion mark.

The nation's foreign reserves totaled $201.54 billion as of the end of February, down $200 million from a month earlier, Yonhap News Agency reported quoting the Bank of Korea (BOK) Tuesday.

Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.

Last year, South Korea's foreign exchange reserves declined for the eighth straight month before rebounding in December as authorities unloaded part of their dollar holdings to stem the won's fall and ease the deepening credit squeeze.

"February's fall came mainly because a stronger greenback eroded the dollar conversion value of assets in other currencies like the yen," said Ha Keun-cheol, an official at the BOK. "However, the weaker conversion value was offset by local banks' repayment of part of maturing dollar loans to foreign exchange authorities."

Last month, local banks repaid the BOK a combined $2.2 billion in short-term dollar loans which the central bank extended to help improve their dollar liquidity.

The data comes as the local foreign exchange market has been gripped by fears that a possible capital flight by Japanese financial firms may trigger another financial crisis in March, leaving local banks unable to pay back debts amid a dollar shortage. The speculation has been widely shrugged off by the government and the BOK.

"Compared with October, local banks are receiving less pressure to service their debt recently," Ha added.