Bank of Korea Buys Gold Amid Foreign Exchange Reserve Slump

South Korea's Bank of Korea has made its first gold purchases in 13 years as it looks to boost local supply. This move comes after the country's foreign exchange reserves dipped to a nearly five-year low in February, due in part to an expanded forex swap line between the central bank and national pension fund.

The decrease in foreign exchange reserves was reported by Yonhap, citing data from the Bank of Korea. The reserves held by Asia's fourth-largest economy dropped to their lowest level since March 2018, when they stood at $384 billion. In February, the figure fell to $373 billion.

The decision to buy gold may be seen as a cautious move by the central bank to ensure stability and liquidity in the financial system. Gold is often used as a hedge against inflation and market volatility.