South Korea forex reserves fall
South Korea reported about the biggest for the July fall in the forex reserves of the country. Nevertheless due to senior foreign exchange official there was no reason for the authorities to shift from the current policy of protecting national currency just to restrain the inflation. Furthermore the worries about the declined reserves didn’t come true. The experts also approved this. They said that the general external payment capability of the country remained unchanged.
According to Lee Tark-koo a currency analyst at KB Futures Co Ltd the decline of the forex reserves in July turned to be below the expectations. From this it becomes clear that the authorities possessed enough reserves as well as other tools for intervention.
Due to the Bank of Korea statement the foreign reserves of the country declined to $247.53 billion as a consequence of the actions aimed at forex market stabilization. This fall appeared to be the biggest one since the 1971. And caused therefore a lot of talks about possible economic crisis.
Bank of Korea did not provide any numbers of the dollars that were sold by it and the Finance Ministry throughout the month to avoid declining won from increasing inflation. The central bank official said that the intervention in the market was held last month wit the aim to correct speculative trades. However such behavior was not common for the Bank of Korea.
The authorities of the country were quite concerned that the growing inflation will affect disposable income of consumers negatively in the period when the drop in the national demand is forecasted to have considerable effect on the country economy.
Since the beginning of the year the forex reserves of the country declined by 5.6 percent and put the country at the sixth place after China, Japan, Russia, India and Taiwan.
