SEOUL, March 6 (Reuters) – South Korea’s central bank said on Wednesday it bought 20 tonnes of gold in February with foreign reserves to increase its holdings of the safe-haven precious metal, but total reserves fell for the first time in nearly a year.
The Bank of Korea said last month’s gold buying cost a total of $1.03 billion. It was the fifth purchase of gold in less than two years, taking total holdings to 104.4 tonnes.
The latest purchase lifted the proportion of gold in the Bank of Korea’s total foreign reserves to 1.5 percent from the previous 1.1 percent when it last bought gold last November, it said in a statement.
“Gold is a real safe-asset that can help (us) respond to tail risks from global financial situations effectively and boosts the reliability of our foreign reserves holdings,” the central bank said.
It added the central bank’s gold purchases were carried out from a long-term standpoint, with immediate price fluctuations holding little meaning.
The Bank of Korea made its first gold purchase in more than a decade between June and July 2011, picking up 25 tonnes then, along with other central banks, in an effort to diversify foreign reserve holdings.
The Bank of Korea said it now expects its ranking among central banks around the world in terms of gold holdings to rise from 36th to 34th.
Meanwhile, South Korea’s foreign reserves in February fell for the first time since May last year, the central bank said in the same statement, as currencies including the British pound and the euro fell against the dollar.
Sterling fell 4 percent against the dollar, while the euro slid 3.2 percent, the Bank of Korea said. It does not give detailed breakdowns of its currency holdings.
Foreign reserves fell to $327.40 billion in February, down $1.51 billion from January’s $328.91 billion.
South Korea had the world’s seventh-largest foreign reserves as of the end of December last year, 91 percent of which were securities.
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