South Korea's foreign reserves rise in January

SEOUL, South Korea - South Korea's foreign currency reserves rose slightly in January as the assets yielded profits and local banks repaid some debts borrowed from the holdings, the central bank said Tuesday.

The reserves totaled $201.74 billion at the end of January, up $520 million from the end of December, the Bank of Korea said in a statement. It marked the second straight monthly rise.

The reserves also swelled in December, ending an eight-month drop caused by the global credit crunch.

The main reasons for the January rise are that the reserves — being kept in bank deposits, bonds and other forms of securities — yielded interest and other profits, and that local banks returned some of their debts borrowed from the reserves, the central bank said.

Foreign currency reserves are a key buffer for a country facing economic turmoil because they can be used to defend its currency, provide liquidity and generally shore up the financial system.

The government has touted reserves as its best defense against a repeat of the 1997-98 Asian financial crisis.

At the end of December, South Korea's reserves were the world's sixth largest behind those of China, Japan, Russia, Taiwan and India. The central bank statement did not provide a ranking for January.

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