South Korea's foreign exchange reserves declined in May from the previous month as a stronger U.S. dollar eroded the conversion value of non-dollar assets, the central bank said Wednesday.

The country's foreign reserves reached US$328.1 billion as of end-May, down $700 million from April, according to the Bank of Korea (BOK).

The May data marked the first decline in three months, and the FX reserves hit a record $328.91 billion in January this year.

Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.

The BOK said that the weakness in the euro, the yen and other currencies drove down their dollar conversion value, overshadowing an increase in investment profits.

The dollar has been on the rise against major currencies amid speculation that the Federal Reserve may taper its $85 billion monthly bond purchase within this year.

The euro depreciated 0.4 percent to the U.S. dollar last month, and the yen fell 3.1 percent against the greenback amid Japan's aggressive monetary easing.

Despite monthly fluctuations, the FX reserves have been on the rise, aided by the continued trade surplus and inflows of foreign capital.

As of the end of April, South Korea was the world's seventh-largest holder of foreign exchange reserves. (Yonhap News)