Foreign Exchange Reserves Increase for Third Consecutive Month Amid Weak Dollar

Foreign Exchange Reserves at End of September
Increase of $4.05 Billion Due to Weak Dollar

As the dollar weakened, South Korea's foreign exchange reserves increased for the third consecutive month.

South Korea's foreign exchange reserves surpassed 420 billion dollars, marking a record high for four consecutive months. According to the "Foreign Exchange Reserves at the End of September 2020" announced by the Bank of Korea on the 7th, the foreign exchange reserves at the end of last month amounted to 420.55 billion dollars, an increase of 1.59 billion dollars compared to the previous month. The foreign exchange reserves, which had sharply declined due to the spread of the novel coronavirus disease (COVID-19), have been continuously increasing for six consecutive months since April. The photo shows an employee organizing US dollars at the Counterfeit Response Center of Hana Bank in Euljiro, Seoul, on the same day. Photo by Moon Honam munonam@

According to the 'End of September Foreign Exchange Reserves' announced by the Bank of Korea on the 7th, South Korea's foreign exchange reserves last month amounted to $419.97 billion, an increase of $4.05 billion compared to the end of the previous month.

South Korea's foreign exchange reserves had decreased for three consecutive months until June. However, recently, as the United States implemented a big cut (a 0.5 percentage point reduction in the base interest rate) and hinted at further rate cuts, the dollar weakened, leading to a third consecutive month of increase in foreign exchange reserves. During September, the US dollar index fell by about 0.9%.

A Bank of Korea official explained, "Due to the quarter-end effect, foreign currency deposits of financial institutions increased in September, and with the weakening of the US dollar, the US dollar equivalent of foreign currency assets in other currencies increased, resulting in a rise in foreign exchange reserves."

The foreign exchange reserves consisted of securities worth $373.3 billion (88.9%), deposits of $22.28 billion (5.3%), Special Drawing Rights (SDR) at the International Monetary Fund (IMF) of $15.33 billion (3.7%), gold worth $4.79 billion (1.1%), and IMF positions of $4.27 billion (1.0%).

As of the end of August, South Korea's foreign exchange reserves ranked 9th in the world. China ranked first with $3.2882 trillion, followed by Japan with $1.2357 trillion. Next were Switzerland with $915.4 billion, India with $682.2 billion, Russia with $513.7 billion, Taiwan with $579.1 billion, Saudi Arabia with $469.5 billion, and Hong Kong with $423.5 billion.