South Korea, the world’s sixth-largest holder of currency reserves, sold US$59 billion of foreign government and agency bonds including US Treasuries last year, the central bank said.
The proceeds from the sale were used to help local banks and companies repay maturing debt as the global financial crisis starved the nation of dollars, the Bank of Korea said in an annual report released in Seoul today. South Korea’s currency reserves decreased US$61 billion to US$201.2 billion in 2008.
“The Bank of Korea focused on safety and liquidity in managing foreign assets in 2008 to cope with a rise in credit risk in the global markets and a surge in demand for foreign currencies in the domestic foreign-exchange market,” the central bank said.
The bank kept the proportion of dollar-denominated assets at 64.5% of total reserves, a level similar to that of the International Monetary Fund, the bank said. It stood at 64.6% in 2007.
Korea’s holdings of foreign government debt stood at US$63.98 billion at the end of 2008, accounting for 31.8% of the reserves, down from 35.5% in 2007, according to the statement. The outstanding amount of agency bonds stood at US$45 billion, accounting for 22.4%, down from 28.8%.