The impact of measures taken by foreign exchange authorities to prevent the sharp rise in the won/dollar exchange rate led to a decrease in foreign exchange reserves by nearly $6 billion last month. According to the statistics released by the Bank of Korea, as of the end of April, foreign exchange reserves stood at $413.26 billion (approximately 561.6 trillion won), down by $598 million compared to the end of March ($419.25 billion).
Since the beginning of this year, foreign exchange reserves have declined in January and February due to the strength of the US dollar, rebounded in March after three consecutive months of decline, but have once again turned downwards.
A Bank of Korea official stated that efforts to stabilize the foreign exchange market, the decline in foreign currency deposits of financial institutions at the end of the quarter, and the decrease in the US dollar translation value of other currency foreign assets have all contributed to this decrease in reserves.
With the US dollar appreciating by about 1.0% (based on the US dollar index) last month, resulting in an increase in the won/dollar exchange rate, the foreign exchange authorities intervened by selling dollars.
The measures to alleviate exchange rate volatility also include the supply of dollars under the foreign exchange swap agreement between the National Pension Service and the Bank of Korea. Additionally, temporary increases in foreign currency deposits of financial institutions to meet the BIS criteria at the end of March have decreased again, and the value of other currency foreign assets converted into dollars has declined in line with the increase in the value of the US dollar.
When divided by asset type, deposits ($18.85 billion) decreased by $11.69 billion compared to the previous month, and Special Drawing Rights (SDRs) for the IMF ($14.64 billion) decreased by $60 million each.
As of the end of March, South Korea’s foreign exchange reserves were ranked 9th in the world in terms of size. (Photo: Provided by the Bank of Korea, Yonhap News)