South Korea and Japan plan the purchase of RMB assets

South Korea and Japan plan the purchase of RMB assets

South Korea said that it intends to invest part of its $300 billion in foreign-exchange reserves in Yuan denominated assets.

David Nealis in Bank of Korea vault

Choo Heung-sik, director-general of the Bank of Korea's reserve management group, was quoted by Bloomberg News as saying that the investment was part of South Korea's plan to diversify its foreign reserves, he went on to say the investment would be made gradually and with a long-term perspective. He added that the initial investment wouldn't be "big" and might start with Chinese government bonds.

South Korea thus becomes the second developed economy, after Japan, with plans to buy Yuan denominated assets with its foreign-exchange reserves and add the Chinese currency to its reserves.

Last month, Japanese Prime Minister Yoshihiko Noda announced plans during his visit to China to buy Chinese government bonds, some analyst believe that the investment might be worth about $10 billion.