May 04, 2011 09:14
Korea's foreign currency reserves have exceeded US$300 billion for the first time, prompting officials to consider putting some of the money into Chinese yuan. "We're taking steps to incorporate yuan into our forex reserves by buying yuan-denominated sovereign bonds," a senior official said Tuesday. "But we first have to remove all regulatory obstacles that prohibit investment of foreign reserves in yuan."
Currently the reserves are invested in U.S. dollars, euros and British pounds as well as gold.
But financial officials want to invest in the yuan in anticipation of the Chinese currency becoming a global benchmark alongside the dollar, and to diversify investments and guarantee returns as the greenback continues its downward spiral.
As of the end of last year, the dollar still accounted for 63.7 percent of Korea’s foreign currency reserves, which is higher than the global average of 61.4 percent. The BOK said forex reserves amounted to $307.2 billion at the end of last month.
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