Korea’s foreign reserves down by $5.7 billion in May on strong U.S. dollar

[Photo by Lee Seung-hwan]

South Korea’s foreign reserves fell for the first time in three months as the country’s monetary authorities took actions to stabilize the local currency against a strong U.S. dollar.

According to a statement released by the Bank of Korea (BOK) on Monday, the amount of foreign reserves at the end of May stood at $420.98 billion, down $5.7 billion from $426.68 billion at the end of April.

“This drop came as the value of U.S. dollar-converted foreign currency assets declined and authorities introduced measures to mitigate volatility in the foreign exchange market,” said an unnamed official from the BOK.

The dollar gained about 2.6 percent last month based on the U.S. Dollar Index. This led to reduced foreign currency assets converted to dollars and the foreign exchange authorities sold dollars to prevent a surge in the won.

By asset, deposits and International Monetary Fund (IMF) special drawing rights declined by $10.02 billion and $230 million, respectively, to $17.82 billion and $14.71 billion each.

On the other hand, the value of securities such as government bonds and corporate bonds gained $4.62 billion to $378.96 billion and gold was unchanged at $4.79 billion as it is priced at a rate of purchase without reflecting the market price.

Korea‘s foreign reserves stood at $426.7 billion at the end of April, the ninth largest amount in the world. China had the largest at $3.2 trillion, followed by Japan at $1.27 trillion, Switzerland at $90.8 billion, Russia at $595.8 billion, India at $590.1 billion, Taiwan at $561.1 billion, Saudi Arabia at $429.8 billion and Hong Kong at $427.4 billion.