Foreign Exchange Reserve
The foreign exchange reserve reached the highest level for the fifth consecutive month in November, voicing some need to diversify the current portfolio, which is focused on marketable securities.
According to the Bank of Korea on November 4, Korea’s foreign exchange reserve increased to US$345.01 in November, up US$1.79 billion from the previous month’s US$343.23 billion that had been the previous record.
The foreign exchange reserve has been on a steady decline, from US$328.8 billion in April, to US$328.1 billion in May and US$326.44 in June, but the trend was reversed in July. But November’s gain was down again from last month’s US$6.3 billion.
Bank of Korea’s International Analysis Team’s Ko Won-hong said, “Various factors, such as increased interest, incomes from marketable securities, and profits from operating foreign assets including the trade of securities, contributed to November’s gain.” He also added, “But the exchange rate, which had been responsible for last month’s dramatic gain, was a non-factor this time, resulting in a lower gain.”
In fact, marketable securities increased by US$0.76 billion from last month’s US$310.75 billion to US$311.51 billion in November, making up 90 percent of foreign exchange reserves.
Hyundai Information Institute researcher Lim Hyi-jeong said, “We have considered various factors such as profitability, liquidity, and convertibility in retaining the amount of foreign exchange reserve. At the moment, marketable securities satisfy these factors, which is the reason why securities make up the majority of the reserve.” She also said, “In the face of the rupturing global financial market, we must try to diversify our portfolio.”