By Kang Seung-woo
The nation’s central bank said Friday that it had purchased more gold again in November to raise its reserve of the yellow metal in an effort to diversify its portfolio of its foreign reserve investment and reduce risks caused by market volatilities.
In addition, growing pursuit of a safe asset stemming from emerging economies also affected the decision to take more gold.
According to the Bank of Korea (BOK), it made a purchase of 15 tons of gold last month to increase the nation’s gold reserves to 54.4 tons worth $2.17 billion as of the end of November.
The purchase was the central bank’s second acquisition of gold this year. It bought 25 tons of the yellow metal in June and July for the first time in 13 years.
Thanks to the buying, the gold reserves of Asia’s fourth-largest economy jumped by three notches to 43rd in the rankings of the World Gold Council.
“The BOK purchased gold last month in a bid to diversify its portfolio of foreign exchange reserves,” Lee Jung, head of the investment strategy team at the BOK’s Reserve Management Group, told reporters.
The move comes as other central banks across the world are rushing to buy the precious metal amid the worsening financial turmoil in the eurozone. The European sovereign debt problems are causing a headache for neighboring countries, showing signs of spreading to France and Germany, the top two strongest economies in the region.
As the metal is viewed as a safe investment vehicle with growing fears in the global markets over the renewed concerns in the eurozone, Mexico has bought 98 tons of gold this year, followed by Russia and Thailand, which purchased 63 tons and 53 tons, respectively, with the total acquisition of gold reaching around 350 tons.
Gold prices have risen about 23 percent so far this year. Prices slowed down after peaking at $1,923 per ounce in early September, but they gained ground again to trade at near $1,750 per ounce.
Meanwhile, the nation’s foreign exchange reserves stood at $308.63 billion at the end of November, down $2.35 billion from the previous month, as a stronger dollar drove down the conversion value of other currencies including the euro and pound, which depreciated 2.9 percent and 2.4 percent against the greenback apiece last month.
Foreign reserves consist of securities and deposits denominated in overseas currencies, along with IMF reserve positions, special drawing rights and gold bullion.
Securities took up the largest part of the reserves with 90.5 percent and deposits represented 6.9 percent.
Based on the October reading, Korea is the eighth-largest holder of foreign exchange the world behind China, Japan, Russia, Taiwan, Brazil, Switzerland and India.