Asia including Korea and Japan to spend about 71 trillion won in September to defend currency value

[Image source=Yonhap News]

[Asia Economy Reporter Oh Gyumin] An analysis revealed that Asian countries including Korea and Japan spent $50 billion (approximately 71.8 trillion KRW) in foreign exchange reserves last month alone to defend their currencies against the ultra-strong US dollar.

According to Bloomberg News on the 14th (local time), data analytics firm Exante Data announced that the total foreign exchange reserves spent by Asian countries, excluding China, to defend their currencies last month amounted to $50 billion. The firm stated that this expenditure exceeded the amount spent during the spread of COVID-19 in March 2020.

Among them, Korea reportedly spent about $17 billion, and Japan about $20 billion.

Up to last month, the total amount of US dollars sold by these countries in the spot market to defend their exchange rates this year reached approximately $89 billion, the highest since the global financial crisis in October 2008.

According to the Bank of Korea, Korea’s foreign exchange reserves decreased by $19.66 billion last month, marking the largest decline since the $27.4 billion drop during the global financial crisis.

Alex Etra, Chief Strategist at Exante Data, said, "Asian currencies are under downward pressure due to interest rate hikes," adding, "There is an unprecedented level of uncertainty depending on the US interest rate hike movements."

Foreign exchange reserves are also declining globally. This year, the total foreign exchange reserves of countries worldwide fell below $12 trillion, a decrease of $1 trillion or more than 8.9% compared to last year. This is the largest decline since Bloomberg began compiling data in 2003.