Foreign Exchange Authorities Sold $17.5 Billion in Q3 for 'Exchange Rate Defense'

[Asia Economy Reporter Jang Hee-jun] The foreign exchange authorities have reportedly sold more than 17.5 billion dollars in the third quarter (July to September) of this year to defend the won/dollar exchange rate.

According to the '2022 3rd Quarter Foreign Exchange Authorities Net Transactions' published on the Bank of Korea's website on the 30th, the foreign exchange authorities net sold 17.543 billion dollars in the foreign exchange market to stabilize the market in the third quarter of this year.

This is the largest net sale amount since the foreign exchange authorities began disclosing foreign exchange market intervention amounts in 2019.

Dollar [Photo by Yonhap News]

As the exchange rate surged sharply due to the Federal Reserve's (Fed) aggressive tightening, the foreign exchange authorities sold dollars in the market to defend the exchange rate. The exchange rate showed a sharp rise, breaking through 1,300 won on June 23 and 1,400 won on September 22, respectively. The closing price peak was 1,439.9 won on September 28.

According to the Bank of Korea, foreign exchange reserves decreased by 19.66 billion dollars in September alone, marking the largest decline since October 2008, when reserves fell by 27.4 billion dollars during the financial crisis.

The Bank of Korea and the Ministry of Economy and Finance have been disclosing the quarterly net difference between total dollar purchases and total sales by the foreign exchange authorities since the third quarter of 2019.