South Korea's foreign currency reserves rose to a record high in July, enlarging the country's buffer against economic turmoil following a sharp decrease during the global financial crisis.
The reserves totaled $285.96 billion at the end of July, up $11.74 billion from $274.22 billion the previous month, the Bank of Korea said Tuesday in a statement.
July's figure was the largest ever, said Moon Han-geun, a senior economist in the Bank of Korea's international department.
The result was the fourth record high for South Korea's reserves of major currencies since November of last year, according to central bank data.
South Korea's reserves are largely invested in securities and deposits, according to the central bank. A small component is a notional currency called Special Drawing Rights which are overseen by the International Monetary Fund. Gold accounts for the smallest portion.
July's increase came because of higher operating profits on the reserves and due to gains in the euro and British pound against the dollar. That caused a "sharp rise" in the dollar value of the reserves held in those two currencies, the central bank said.
Moon said that the euro gained 6.6 percent against the dollar in July while the pound rose 5 percent. The monthly gain of $11.74 billion in the reserves was the largest since May last year and the third biggest ever, he said.
Foreign currency reserves are a key buffer for a country facing economic turmoil because they can be used to defend its currency, provide liquidity and generally shore up the financial system. The South Korean government touts the reserves as a key defense against potential crisis.
South Korea's reserves have risen since falling to $200.51 billion in November of 2008 as monetary authorities dipped into the pool of cash to battle the effects of the global credit crisis.
As of the end of June the reserves remained the world's sixth largest behind those of China, Japan, Russia, Taiwan and India, the central bank said. The statement did not provide a global ranking for July.
The South Korean won was trading Tuesday morning at a 12-week high of 1,168.45 to the dollar, though was little changed from its close of 1,164.50 at the end of 2009.
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