South Korea's foreign currency reserves hit a new record high in February for the second straight month, the central bank said Thursday, though the country's global ranking slipped to seventh in total holdings.
The country's official foreign reserves totaled $297.67 billion at the end of last month, the Bank of Korea said in a statement, up $1.71 billion from the previous high of $295.96 billion in January.
South Korea's reserves, the world's seventh largest as of the end of January, hit a series of all-time highs last year. Asian countries lead the world in reserve holdings.
The central bank attributed February's gain to higher operating profits on the reserves and gains in the euro and British pound against the greenback, which led to an increase in the dollar value of the portion of the reserves denominated in the European and British currencies. January's increase was for the same reason.
South Korea's reserves have steadily climbed since falling to $200.51 billion in November 2008 as monetary authorities dipped into the pool of cash to battle the effects of the global credit crisis.
Reserves are a key economic and policy weapon for a country because they can be used to defend its currency, provide liquidity and bolster the financial system. The recovery in South Korea's reserves has enlarged its buffer against potential economic turmoil. The South Korean government sees the reserves as a key defense against any crisis.
South Korea's reserves are largely invested in securities and deposits, according to the central bank. A smaller component is a notional currency called Special Drawing Rights, which are overseen by the International Monetary Fund. Gold accounts for the smallest portion.
South Korea's reserves were the world's seventh largest behind those of China, Japan, Russia, Taiwan, India and Brazil as of the end of January, according to the central bank, which did not provide a global ranking for February. Seven of the top 10 holders of reserves in January were in Asia, according to the bank.
South Korea's reserves had been the sixth largest at the end of December and had ranked as high as fifth as recently as August.
China and Japan have by far the largest holdings of reserves. China, which releases figures quarterly, had $2.8 trillion at the end of 2010. Japan's international reserves, meanwhile, totaled $1.09 trillion at the end of January, according to the country's Ministry of Finance.
© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.