The ratio of US dollars in South Korea’s foreign reserves rose to a record high last year as the Bank of Korea boosted dollar holdings ahead of rate hikes by the US Federal Reserve, it said on Thursday.
The US dollar ratio of reserves held by South Korea rose to 70.3 percent as of end-2016 compared to 66.6 percent in 2015, the central bank said in an annual report. That ratio was the highest since the BOK started publishing ratio data in 2008.
“We expanded the share of U.S. dollar-denominated assets on expectations the dollar would strengthen on hopes of interest rate hikes by the Federal Reserve,” the bank said in the report.
You may also like to watch this video
“The shares of other currency assets like the euro were reduced.”
The BOK added it had acquired more government bonds last year in response to wider upside and downside risks from global events.
It also increased the share of stocks in its portfolio for high profits to boost liquidity while reducing that of non-government securities to manage overall investment risk, the report said.
In 2016 South Korea had the world’s eighth-largest level of foreign reserves, with its holdings at a record $371.10 billion, up $3.14 billion from 2015.