The Bank of Korea said on Aug. 3 that it will work with LS MnM, the Korea Exchange (KRX) and the Korea Securities Depository (KSD) to purchase domestically produced gold through over-the-counter trades, marking its first such move in 13 years. The central bank linked the plan to rising geopolitical risks and a greater need to diversify foreign exchange reserves. LS MnM and Korea Zinc produce about 40 to 45 metric tons of gold a year from smelting byproducts, with roughly 10% exported. The Bank of Korea said it may use KRX trading and settlement infrastructure and warehousing facilities now being prepared by KSD if relevant companies apply. It also said bulk transactions will be arranged after prior discussions on price and volume to limit the impact on domestic gold prices. The bank added that the new channel could reduce foreign exchange risk because its previous overseas purchases were paid for in U.S. dollars. Separately, the central bank said it bought a small amount of gold ETFs in the second quarter. As of July, its gold holdings were unchanged at 104.4 tons, while South Korea’s foreign exchange reserves stood at $427.36 billion at the end of June, including $4.79 billion in gold reserves.
The Bank of Korea said Monday it will work with LS MnM, the Korea Exchange (KRX) and the Korea Securities Depository (KSD) to buy domestically produced gold through over-the-counter transactions, its first such purchase in 13 years.
The central bank said rising geopolitical risks have increased the need to diversify South Korea’s foreign exchange reserves. LS MnM and Korea Zinc produce about 40 to 45 metric tons of gold each year from smelting byproducts, and about 10% of that volume is exported.
According to the Bank of Korea, if the relevant companies file applications, it will consider buying some of the gold originally intended for export by using KRX’s trading and settlement system and warehousing facilities that KSD is preparing.
The central bank said it will arrange block transactions after discussing price and volume in advance, aiming to limit the effect on domestic gold prices. It added that the new channel should help reduce foreign exchange risk because its previous overseas gold purchases were all settled in U.S. dollars.
The Bank of Korea also said it bought a small amount of gold ETFs in the second quarter. As of July, its gold holdings were unchanged at 104.4 tons. South Korea’s foreign exchange reserves stood at $427.36 billion at the end of June, including $4.79 billion in gold reserves.
The report was carried by BlockBeats, citing Jin10.
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