SKorea's reserves top $300 billion for first time

SEOUL, South Korea (AP) — South Korea's foreign reserves surged in April to top $300 billion for the first time as the country's buffer against financial turmoil posted a fourth straight record high.

South Korea's official foreign reserves totaled $307.20 billion at the end of last month, the Bank of Korea announced Tuesday. That was $8.58 billion higher than the previous record of $298.62 billion set in March.

Foreign reserves are a key economic and policy tool that countries can wield to defend their currency from speculative attack, provide liquidity and bolster the overall financial system. Asian countries and territories lead the world in reserve holdings.

South Korea's central bank attributed April's gain to a "sharp increase" in the dollar value of the portion of the reserves denominated in the euro and British pound in line with their strength against the greenback. The bank said that increased operating profits on the reserves also contributed to the gain.

The South Korean government sees the reserves as a key defense against financial turmoil after experiencing the 1997-98 Asian financial crisis, when it received a multibillion dollar international bailout, and the instability that accompanied a dollar liquidity crunch during global financial turmoil in 2008.

Seoul's reserves are largely invested in securities and deposits, according to the bank. A smaller component is a notional currency called Special Drawing Rights, which are overseen by the International Monetary Fund. Gold accounts for the smallest portion.

South Korea's reserves remained the world's seventh largest behind those of China, Japan, Russia, Taiwan, Brazil and India as of the end of March, according to the central bank, which did not provide a global ranking for April. Seven of the top 10 holders of reserves as of the end of March were in Asia, according to the bank.

South Korea's reserves had been the sixth largest at the end of December and had ranked as high as fifth as recently as August.

China and Japan have the largest holdings of reserves. China, which releases figures quarterly, had $3.04 trillion of foreign reserves at the end of March. Japan's international reserves, meanwhile, totaled $1.12 trillion at the end of March, according to the country's Ministry of Finance.

Other Asian economies among the top 10 in reserve holdings are Hong Kong and Singapore, according to the Bank of Korea.