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South Korea's foreign exchange reserves havedipped for the first time in seven months.
The country had enjoyed a steady rise in reservesfrom February to August, but the slight drop in September, combined with the central bank'sfailure to renew a currency swap deal with China, is worrying experts.
Lee Unshin reports.
According to the Bank of Korea, as of September,the nation's foreign exchange reserves stood at 384.
67 billion U.
down 170million from the previous month.
It is the first dip in Korea's foreign exchangereserves in seven months.
As of the end of August, the country was theworld's ninth largest foreign exchange holder.
Central bank data shows that the greenbackstrengthening in the global market lowered the value of non-dollar currencies, includingthe Korean Won, Euro and Japanese Yen.
Meanwhile China's reserves remained the highestin the world, rising for the 8th month straight to over 3.
1 trillion dollars last month.
Seoul and Beijing's 56 billion dollar currencyswap deal came to an end earlier this week.
as the two nations failed to reach an agreementon terms to extend the deal.
The agreement had accounted for some 46-percentof the total value of Korea's foreign currency swap deals.
While BOK officials added that negotiationsto renew the deal are still underway,.
market analysts in Korea voice concerns that if thedeal is over for good, it could result in financial damage for both sides in the longrun.
They also stressed the need to keep Korea'sforeign exchange reserves high in case a new deal isn't agreed.
Lee Unshin Arirang News.
Why Countries Keep Forex Reserves. Jayant Manglik, President of Retail Distribution at Religare Securities Limited, answers this question in this video. Visit www.religareonline.com to know more.