BOK says total foreign reserves immediately usable

SEOUL, March 10 (Yonhap) -- South Korea's entire foreign exchange reserves are
usable at any time because they are invested in highly liquid assets and can thus
be easily converted into cash, the central bank said Tuesday.

The comment by the Bank of Korea (BOK) came amid growing market speculation that
the country doesn't have enough usable foreign reserves to meet immediate needs.
South Korea's foreign reserves totaled US$201.54 billion at the end of February,
the sixth-largest in the world.
"The entire foreign reserves can be tapped at anytime since they are invested in
highly liquid assets," the BOK said in a statement, brushing off market concern
over their usability.
Market speculation has erupted following the local currency's recent descent
against the U.S. dollar and a dollar liquidity shortage among local banks. The
Korean currency fell 25.7 percent to the dollar last year alone and has been
declining this year as well.
Last year, South Korea's foreign exchange reserves declined for the eighth
straight month before rebounding in December as the foreign exchange authorities
tapped part of their dollar holdings to stem the won's sharp fall.
Foreign reserves consist of securities and deposits denominated in overseas
currencies, along with International Monetary Fund reserve positions, special
drawing rights and gold bullion.
South Korean lenders, saddled with high short-term overseas borrowing, have been
suffering from dollar shortages in the aftermath of the U.S.-sparked global
financial turmoil. Some have raised questions that the country's foreign reserves
may not be sufficient to cover their debt burdens.
According to the government, foreign debt held by local banks and foreign
branches reached $92.6 billion as of the end of January, and $38.3 billion in
overseas debt will mature this year. The government and the BOK have said the
amount is manageable given the country's foreign reserves.
To meet growing needs for dollar liquidity, the BOK announced a $30 billion
currency swap agreement with the U.S. Federal Reserve in late October, helping
ease fears about its declining foreign reserves.
South Korea also reached new currency swap arrangements with China and Japan in
mid-December, expanding its existing swap lines with the two countries to $30
billion each.
sooyeon@yna.co.kr
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