FX reserves increases on gains from asset management

By Kim Jae-won

The nation’s foreign exchange reserves increased for the fourth straight month in May thanks to gains from foreign currency assets, the central bank said Wednesday.

The reserves reached a record $371.5 billion last month, up $1.6 billion from April, according to the Bank of Korea (BOK).

“A rise in gains from overseas asset management offset falls in the dollar conversion value of euro-denominated assets,” the central bank said.

In May, the euro slipped 1.3 percent against the U.S. dollar, while the yen slumped 3.9 percent against the greenback.

The BOK said Korea was the world’s sixth-largest holder of foreign reserves in April. China had the largest FX reserves with $3.7 trillion, followed by Japan with $1.3 trillion. The data for China is based on end-March figures.

Considering Hong Kong’s FX reserves were $343.2 billion in April, China’s real FX reserves surpassed $4 trillion. The May comparison data is not yet available.

Saudi Arabia came third, owning $686.4 billion of FX reserves in April while those of Switzerland reached $599.6 billion. Taiwan ranked fifth with $418.2 billion.

By type, securities accounted for 90.3 percent of Korea’s FX reserves in May, followed by deposits with 7.2 percent. The amount of securities dropped $4 billion to $335.1 billion in May from April, while that of deposits increased $5.6 billion to $26.6 billion during the period.

The portion of bullion marked 1.3 percent in May, while that of special drawing rights (SDR) reached 0.8 percent. The International Monetary Fund (IMF) reserve position accounted for 0.4 percent of the reserves. The amount of the three reserves changed little during the month.

The SDR is an international reserve asset created by the IMF in 1969 to supplement the existing official reserves of member countries.