Seoul, Dec 2 (IANS): South Korea's foreign reserves contracted to $308.63 billion last month due to a reduction in conversion value of non-dollar denominated assets, the central bank said Friday.

Foreign reserves reached $308.63 billion as of the end of November, down $2.35 billion from a month earlier, according to the Bank of Korea (BOK).

"Despite a growth in investment profits, the foreign reserves decreased last month due to falling conversion value of non-dollar assets. The Europe's shared currency and the British pound depreciated against the dollar," Shin Jae-hyuk, an economist at BOK, told reporters.

The euro dropped 2.9 percent against the greenback in November, while the British pound depreciated 2.4 percent versus the dollar, reported Xinhua.

The nation's foreign reserves consisted of $279.35 billion of securities, $21.42 billion of deposits, $3.49 billion of special drawing right (SDR), $2.2 billion of International Monetary Fund (IMF) positions and $2.17 billion of gold bullion.

As of the end of October, South Korea was the world's eighth-largest holder of foreign reserves following China, Japan, Russia, Taiwan, Brazil, Switzerland and India.

Meanwhile, the BOK purchased gold bullion last month after buying the precious metal for two months ended July. The central bank bought a total of 25 tonnes in gold bar between June and July before purchasing 15 tonnes in November, sending the BOK's total holdings to 54.4 tonnes.

"We bought gold in a bid to diversify our reserves portfolio as well as to boost the return-to-risk ratio. We plan to buy and hold gold bullion over the long run," said Lee Jung, head of BOK's investment strategy team.

International central banks, especially in emerging economies, have become a big customer in the gold market recently as they sought to diversify their foreign reserves portfolio amid weaker status of the dollar as a reserve currency.

The average ratio of gold against the total foreign reserves for global central banks stood at a single digit level in mid-2000, sharply down from over 60 percent in early 1980. The ratio resumed its upward trend after bottoming at 8.5 percent in 2007, and was up to 11.3 percent as of the end of March.

India bought 200 tonnes in gold from the IMF in 2009, while Thailand and Bangladesh purchased 15.6 tonnes and 10 tonnes each in 2010. The BOK estimated that global central banks bought a total of around 350 tonnes in gold bars this year.