S Korea’s FX reserves fall in June by most since late 2008

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SEOUL : South Korea’s foreign exchange reserves shrank last month for a fourth consecutive month and by the most since the 2008 global financial crisis due in part to dollar-selling intervention to support the won, data showed on Tuesday.

The Bank of Korea said the country’s foreign exchange reserves, measured in U.S. dollars, declined in June by $9.43 billion to reach $438.28 billion at the end of the month.

The central bank attributed the decline to the U.S. dollar’s strength, which cut the dollar value of assets held in other currencies, and its dollar-selling intervention to support the weakening won. It did not provide a breakdown of the figures.

The foreign exchange reserves declined by a combined $23.49 billion during the March-June period, its data showed.

South Korea’s won fell 8.4 per cent against the dollar for the first six months of this year, just off a near 13-year low set on June 30, due to the mix of the dollar’s spurt, a growing trade deficit and sell-off of local stocks by foreign investors.

It was the second-worst performer among major Asian currencies for the six-month period after Japan’s yen, which lost some 15 per cent of its value versus the dollar.

Foreign investors sold a net 16.51 trillion won ($12.72 billion) worth of local stocks on the main board during the January-June period this year after a net 25.41 trillion won sell-off for the whole of last year, Korea Exchange data showed.

The main board’s benchmark KOSPI fell 21.7 per cent for the first half of this year, far worse than a 16.8 per cent drop in the MSCI’s broadest index of Asia-Pacific shares outside Japan for the same period. ($1 = 1,298.1400 won)

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