FX reserves drop in Aug.

Korea’s foreign currency reserves slightly dwindled from a month earlier in August largely due to the strengthening of the U.S. dollar, which led to a dip in the dollar value of other foreign currencies held by the country, the central bank said Wednesday.

The country’s foreign currency reserves came to $401.48 billion as of the end of last month, down $1.63 billion from a month before, according to the Bank of Korea (BOK).

The amount marks the world’s ninth largest.

Foreign exchange reserves consist of securities and deposits denominated in overseas currencies, as well as International Monetary Fund (IMF) reserve positions, special drawing rights and gold bullion.

Foreign securities came to $370.99 billion as of end-August, slipping $1.03 billion from the previous month and accounting for 92.4 percent of the country’s overall foreign currency reserves.

Foreign exchange deposits came to $19.66 billion, down $580 million over the cited period, while the country’s reserve position at the IMF inched down by $10 million to $2.66 billion.

Korea is faced with a greater risk of capital outflow since the BOK lowered its policy rate to 1.5 percent in July, marking its first rate cut in about three years and further widening the interest rate gap with that of the United States, which currently sits at a range of 2 percent to 2.25 percent.

The central bank, however, has repeatedly said there have so far been no signs of any serious outflow.