South Korea's foreign currency reserves hit a record high in November, the central bank said Wednesday, climbing after a steep fall last year amid the global credit crunch.
The reserves totaled $270.89 billion at the end of November, up $6.7 billion from $264.19 billion the previous month, the central bank said in a statement.
The total figure marked the largest on record, said Moon Han-geun, a senior economist in the Bank of Korea's international department.
The bank attributed the increase to higher profits on the reserves, an increase in the dollar value of holdings of euros and yen because of gains in those currencies against the greenback, as well as other factors.
As of the end of October the reserves were the world's sixth largest behind those of China, Japan, Russia, Taiwan and India, the central bank said. The statement did not provide a ranking for November.
South Korea's foreign reserves came under close scrutiny last year amid nagging fears the country could face a currency crisis amid the global economic and financial turmoil.
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 had touted the reserves as it best defense against any potential currency crisis.
As dollar liquidity dried up following the collapse of U.S. investment bank Lehman Brothers, however, the Bank of Korea scrambled to set up foreign exchange credit lines in the form of swap agreements with the U.S. Federal Reserve, the Bank of Japan and the People's Bank of China to help boost investor confidence.
The reserves had peaked at $264.25 billion in March 2008 but declined to $200.51 billion in November. In October they recorded their biggest monthly decline on record — $27.4 billion — as authorities dipped into the pool of cash to battle the effects of the global credit crisis.
Currency reserves can be wielded for varied purposes, including to defend the value of a country's currency and generally shore up the financial system.
The Bank of Korea's policy is to neither confirm nor deny currency market interventions.
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