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Korea's foreign exchange holdings dwindled by US$27.42 billion in a space of a month, from $239.67 billion in late September to $212.25 billion in late October, the Bank of Korea said Tuesday. It was the largest-ever monthly decline.
The central bank said the country's foreign exchange holdings dwindled due to increased liquidity supply to banks in the wake of the global financial crisis. Then drop was also due to the decline in the dollar-denominated value of foreign exchange reserves in euros and the British pounds when the dollar surged around the world, the BOK added.
A considerable amount of the foreign exchange holdings was used by banks to repay short-term foreign loans. ˇ°Now such short-term foreign borrowings are declining, there is no problem with the country's sovereign credit rating," the bank added.
Korea will be able to increase its foreign exchange reserves by $30 billion after it signed a currency swap deal with the U.S. last Thursday, but the dollars from the swap deal are not counted as part of the country's foreign exchange holdings because they are supplied to commercial banks right after they are brought in. The country is also hoping to increase the ceiling of the currency swap with China from the current $4 billion to $10-30 billion.
(englishnews@chosun.com )
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