South Korea's foreign exchange reserves fell by the most in nearly three years in September due mainly to the weaker dollar conversion value of non-dollar assets and suspected dollar-selling intervention. The country's foreign reserves reached US$303.38 billion as of the end of September, down $8.81 billion from the previous month, the Bank of Korea (BOK) said Wednesday.
The September reading marked the largest monthly fall since the foreign reserves declined by $11.74 billion in November 2008, the central bank said. The monthly decline was the fourth-largest since the central bank began to compile related data, according to South Korean (Yonhap) News Agency.
Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.
The FX reserves hit a fresh record high of $312.19 billion in August since they surpassed the $300 billion mark for the first time in April amid sustained inflows of foreign capital and robust exports.
"Last month, the FX reserves fell mainly because a stronger US dollar curtailed the conversion value of assets in other currencies," Shin Jae-hyuk, an economist at the BOK, told reporters.
Shin declined to comment on foreign exchange authorities' dollar-selling intervention, but market players speculated that their dollar sale aimed to curb the won's sharp weakness led the foreign reserves to fall last month.
In September, gloomier global economic outlooks and Europe's debt crisis raised demand for the dollar as safe assets. Last month, the euro depreciated 6.8 percent to the dollar and the pound declined 4.1 percent against the greenback. The Japanese yen inched down 0.6 percent to the dollar.