SOUTH KOREA EXPECTS FOREX RESERVES TO HIT RECORD HIGH

Foreign exchange reserves of South Korea is expected to hit a record U.S. 270 billion U.S. dollars this year, boosted by gains in local currency and expanding current account surplus, the Finance Ministry said Sunday.


The Ministry of Strategy and Finance predicted Korea will continue to increase its reserves in the second half, pushing their total value beyond the current record of $ 264 million, reached in March last year.

Reserves "in South Korea FX could exceed the previous record that the country is expected to continue to record huge current account surplus, and the stabilization of local currency is also expected to add the value of the reserves," said an official of the ministry said.

Foreign exchange holdings rose for a fourth month to 231.7 billion U.S. dollars in June, the highest since September.

It sank to the lowest level in nearly four years in November, the government provided funds in foreign currency to local banks that were struggling to pay their debts due to the sharp depreciation of the Korean won and a global credit crisis.

The reserves began to gain in March, when the country recorded a current account surplus.

The surplus achieved in the second highest in U.S. 5.43 billion U.S. dollars in June, after rising for the fifth consecutive month in the revival of exports.

The won has made a remarkable recovery in that time, rising almost 28 percent against the U.S. dollar since reaching a maximum 11-year low in early March.

This has helped to lift stocks by bringing the value of assets denominated in foreign currency.

The reserves will also receive a boost to the government's plan to recover funds in foreign currency extended to the banking system and the emission of around 3 billion U.S. dollars in foreign exchange stabilization bonds, scheduled for the second half of the year , the ministry said.

Reservations are adding to the optimism, the data from the International Monetary Fund showed South Korea grew at a rate of a second faster among member countries.

The farms of the country increased 14.3 billion U.S. dollars in late May from a month earlier, the fastest pace after Russia.

Data exclude China due to lack of available statistics.

"Government officials generally favor more reserves from the global financial crisis in September despite earlier were concerned about excessive holdings," said a Finance Ministry official.