SEOUL. June 5: South Korea's foreign exchange reserves rose to 31.9 billion dollar at the end of May from 29.83 billion dollars at the end of April, the central bank of Korea said on Thursday, reports Reuter.

The central bank attributed the increase in foreign exchange holdings to a reduction in the trade deficit, an Inflow of foreign funds and subdued speculative demand for foreign currency in line with stabilisation of the dollar rate during May.

South Korea's customs-clear basis trade deficit fell to 690 million in May from dollar 1.49 billion in April.

A net of dollars 1.16 billion flowed in during May after the foreign stock ownership ceiling was expanded to 23 per cent on May 2 from previous 20 per cent.

But foreign exchange reserves were off from the dollars 33.24 billion total at the end of 1996.