South Korea's Foreign Exchange Reserves Decrease by $8.9 Billion in March Alone

Bank of Korea 'Foreign Exchange Reserves at the End of March 2020'
"Market Stabilization Measures by Foreign Exchange Authorities and Strong Dollar Impact"

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] South Korea's foreign exchange reserves decreased by as much as $8.96 billion in just one month. This marks a decline for two consecutive months.

According to the Bank of Korea on the 3rd, as of the end of March, South Korea's foreign exchange reserves stood at $400.21 billion, down $8.96 billion from the previous month ($409.17 billion). This is the largest monthly decrease since November 2008 (-$11.7 billion) during the financial crisis.

A Bank of Korea official explained, "The market stabilization measures by the foreign exchange authorities and the decrease in the dollar value of foreign currency assets denominated in other currencies due to the strong US dollar influenced this decline." It was also noted that the global 'dollar shortage' phenomenon caused by the COVID-19 pandemic was a key factor behind the reduction in foreign exchange reserves.

Foreign exchange reserves had been hitting record highs until January but shifted to a downward trend in February after six months, continuing to decline for two consecutive months.

By asset type, securities (such as government and corporate bonds) amounted to $357.6 billion, down $13.62 billion from the previous month. Securities accounted for 89.4% of the foreign exchange reserves. Meanwhile, deposits held at banks increased by $4.62 billion to $31.72 billion. The International Monetary Fund (IMF) Special Drawing Rights (SDR) rose by $40 million to $3.32 billion, and the IMF position decreased by $10 million to $2.78 billion.

Gold holdings remained unchanged at $4.79 billion (1.2% share) compared to the previous month.

Meanwhile, as of the end of February, South Korea ranked 9th in the world in terms of foreign exchange reserves.

China ($3.1067 trillion) holds the largest reserves, followed by Japan ($1.359 trillion) and Switzerland ($855 billion).

This content was produced with the assistance of AI translation services.