Foreign Exchange Reserves Recover to $420 Billion... Highest in 2 Years and 5 Months

As of End-September, FX Reserves Reach $422.02 Billion
Up $5.73 Billion from $416.29 Billion at End of Previous Month
Driven by Higher Investment Returns and Quarter-End Effect

South Korea's foreign exchange reserves have increased for the fourth consecutive month, surpassing 420 billion dollars. This is the highest level since April 2023. This growth was largely attributed to higher investment returns, as well as an increase in foreign currency deposits at financial institutions due to the end-of-quarter effect.

Yonhap News Agency

According to the Bank of Korea on October 10, as of the end of last month, South Korea's foreign exchange reserves stood at 422.02 billion dollars, up 5.73 billion dollars from 416.29 billion dollars at the end of the previous month. This is the largest amount in two years and five months since April 2023, when reserves reached 426.68 billion dollars. It is also the first time since December 2023 (420.15 billion dollars) that reserves have exceeded 420 billion dollars. This was influenced by increased investment returns and a rise in financial institutions' foreign currency deposits due to the end-of-quarter effect.

South Korea's foreign exchange reserves had steadily increased until the second half of 2021, peaking at 469.2 billion dollars at the end of October 2021. However, they began to decline due to factors such as the U.S. Federal Reserve's interest rate hikes that started in earnest in 2022. From February to May of this year, reserves fell below 410 billion dollars, but with four consecutive months of growth, they surpassed 420 billion dollars as of the end of September.

Among the components of foreign exchange reserves in September, securities-including government bonds, corporate bonds, and government agency bonds-increased by 12.25 billion dollars from the previous month to 378.42 billion dollars. The proportion of securities rose to 89.7% of total reserves. In contrast, deposits decreased by 6.47 billion dollars to 18.54 billion dollars (4.4%). Special Drawing Rights (SDRs) from the International Monetary Fund (IMF) amounted to 15.78 billion dollars (3.7%), gold stood at 4.79 billion dollars (1.1%), and the IMF position was 4.49 billion dollars (1.1%).

Meanwhile, as of the end of August, South Korea maintained its position as the world's 10th largest holder of foreign exchange reserves. Among the top 10, only Taiwan (ranked 6th) and Hong Kong (ranked 9th) saw decreases in their reserves, with reductions of 400 million dollars and 3.8 billion dollars, respectively.