Foreign Exchange Reserves Down by $790 Million in December... Decline for Two Consecutive Months

Announcement of Foreign Exchange Reserves at the End of December 2021

[Asia Economy Reporter Jang Sehee] South Korea's foreign exchange reserves decreased by $790 million in one month, marking a decline for two consecutive months. This was due to increased principal and interest repayments on Foreign Exchange Equalization Fund bonds.

According to the 'Foreign Exchange Reserves at the End of December 2021' announced by the Bank of Korea on the 5th, the country's foreign exchange reserves were recorded at $463.12 billion as of the end of last month. This is a decrease of $790 million compared to $463.91 billion at the end of November.

The Bank of Korea explained that although the US dollar conversion amount of foreign currency assets denominated in other currencies increased, the overall amount decreased due to principal and interest repayments on foreign currency-denominated Foreign Exchange Equalization Fund bonds.

A Bank of Korea official stated, "The dollar was strong in the early part of the month but weakened somewhat by the end," adding, "As it weakened, the converted amount increased slightly, but overall it decreased due to expenditures such as principal and interest repayments."

By asset type, securities such as government and corporate bonds increased by $750 million from the previous month, reaching $421.69 billion. Deposits decreased by $1.56 billion to $16.63 billion.

Additionally, the International Monetary Fund's (IMF) Special Drawing Rights (SDR) remained unchanged at $20 million, and the IMF position and gold were $4.63 billion and $4.79 billion respectively, with no change compared to the previous month.

Domestic foreign exchange reserves recorded record highs for two consecutive months in April and May last year, then decreased in June due to the strong US dollar, followed by an increasing trend from July to October, breaking records, before turning to a decline in November.

As of the end of November, South Korea's foreign exchange reserves ranked 9th in the world. China leads with $3.2224 trillion, followed by Japan with $1.4058 trillion, and Switzerland with $1.0826 trillion.