S Korea salts away more dollars

South Korea's recovery is taking time, but picking up in pace

South Korea's foreign currency reserves have risen to an record high of $215bn (£122bn), the Bank of Korea has said.

Analysts say they have risen because the South Korean government has been buying US currency to dampen the Korean won's high value against the dollar.

The won has been one of Asia's best performing currencies in recent months, while the dollar has weakened globally.

But there are fears that a strong won could hurt Korean exports by making them more expensive overseas.

The Korean economy is currently growing at more than 4% a year and is recovering from the credit bubble burst of 2002 that left many families heavily in debt.

The country's foreign reserves are the fourth-largest in the world after China, Taiwan and Japan.

Earlier this week, China said its reserves had risen 34% during 2005 to a new record of $819bn, and were set to overtake Japan's reserves of $847bn this year.