SEOUL - SOUTH Korea's foreign exchange reserves rose in December for the first time in nine months as investment gains and rises in non-dollar assets more than offset dollar-selling intervention, the central bank said on Monday.

The country's foreign exchange reserves rose to $201.2 billion (S$292.24 billion) at the end of December from $200.5 billion (S$291.4 billion) at the end of November, when the reserves were at the lowest since the end of January 2005, central bank data showed.

The Bank of Korea said in a statement the reserves rose last month because investment gains and strength in non-dollar currencies against the US unit outweighed dollar injection into the local banking system and dollar-selling intervention.

A central bank official said local authorities had carried out moderate dollar selling to help stem the won's decline last month, but declined to provide the value.

'The authorities had stepped in to carry out smoothing operations,' the official said by telephone, declining to be named.

But South Korea's foreign reserves, which ranked sixth in the world at the end of November, shrank by $61.0 billion in all of 2008, marking the first annual drop since 1997 when they fell by $12.8 billion, the Bank of Korea's data showed.

The central bank said 89.6 per cent of the reserves were invested in securities, followed by 10.0 per cent deposited at financial institutions. -- THOMSON REUTERS