Continued Strong Dollar... Foreign Exchange Reserves Decline for Second Consecutive Month

Since Trump's election, the dollar has remained strong, causing South Korea's foreign exchange reserves to decline for the second consecutive month.

Yonhap News

According to the 'End of November Foreign Exchange Reserves' announced by the Bank of Korea on the 4th, South Korea's foreign exchange reserves stood at $415.39 billion last month, down $300 million from the end of the previous month.

South Korea's foreign exchange reserves had increased for three consecutive months from July due to a weaker dollar caused by the U.S. Federal Reserve's big cut (a 0.5 percentage point interest rate reduction) and other factors. However, since former President Donald Trump's re-election, the dollar has remained strong, leading to a decline for two consecutive months starting in October. In November, the U.S. dollar index was 106.05, rising 2.0% during the month. The dollar index in the previous month was 103.99.

A Bank of Korea official explained the cause of the decrease in foreign exchange reserves, stating, "Although operating profits from overseas stocks and bonds occurred and foreign currency deposits at financial institutions also increased, the decrease was mainly due to the reduction in the U.S. dollar equivalent of foreign currency assets in other currencies caused by the strong U.S. dollar."

The foreign exchange reserves consisted of securities at $372.39 billion (89.6%), deposits at $19.13 billion (4.6%), Special Drawing Rights (SDR) at the International Monetary Fund (IMF) at $14.9 billion (3.6%), gold at $4.79 billion (1.2%), and IMF positions at $4.19 billion (1.0%).

As of the end of October, South Korea's foreign exchange reserves ranked 9th in the world. China ranked first with $3.2611 trillion, followed by Japan with $1.239 trillion. Next were Switzerland with $937.4 billion, India with $682.1 billion, Russia with $631.6 billion, Taiwan with $576.8 billion, Saudi Arabia with $434.7 billion, and Hong Kong with $421.4 billion.