Strong Dollar Impact
The weight of U.S. dollars among foreign currency assets of the Bank of Korea (BOK) exceeded 60 percent again in three years. It was due to the central bank’s increasing dollar assets as the U.S. dollar showed a strong trend with the U.S. economic recovery.
According to the 2014 Annual Report written by the BOK on March 31, the dollar assets possessed by the BOK accounted for 62.5 percent of total foreign assets as of the end of last year. The U.S. dollar asset ratio of foreign currency assets rose higher than 60 percent in three years.
The dollar weight continued to decrease from 65 percent since 2007 when the BOK first revealed the foreign currency amount. In 2012, the dollar weight first dropped to below 60 percent, recording 57 percent. The weight increased slightly in 2013 from a year ago to 58 percent, and it surpassed 60 percent again last year.
However, the weight of other currencies such as the euro, , and pound decreased by 4.2 percent from the previous year to 37.5 percent.
The BOK adjusted the portfolio of foreign currency assets mainly to consist of corporate bonds beneficial from the economic recovery and the treasury and government agency bonds that have a high safety. Asset liquidation bonds including mortgage-backed securities (MBS) were reduced.
Seo Bong-guk, head of the currency asset planning department at the BOK, explained, “We are carrying out a two-track strategy by increasing corporate bonds based on the judgment of economic recovery in the U.S., while raising the safe government bonds at the same time.”