Korea’s foreign exchange reserves fall in August as U.S. dollar gains ground

[Image source: Gettyimagesbank]

South Korea’s foreign exchange reserves lost $3.5 billion to $418.3 billion as of the end of August, according to the Bank of Korea.

The decline follows two consecutive months of growth in June and July, with gains of $470 million and $350 million respectively.

The strengthening of the U.S. dollar, with a 1.5 percent increase in the U.S. dollar index to 103.16 in August from 101.62 a month earlier, played a significant role in August‘s drop alongside government efforts to stabilize the foreign exchange market.

“The decrease was partially due to a temporary effect resulting from a currency swap with the National Pension Service and the exchange of dollars,” a central bank official said.

In the foreign exchange reserves’ composition, holdings in securities including government and corporate bonds increased by $2.5 billion, while special drawing rights (SDR) from the International Monetary Fund (IMF) rose by $240 million.

Meanwhile, cash equivalent deposits decreased by $6.13 billion to $14.84 billion, and the IMF position dropped by $120 million to $4.59 billion.

Gold reserves remained at $4.79 billion as they do not reflect market price fluctuations.

As of the end of July, South Korea had the eighth largest foreign exchange reserves globally, with China topping the list at $3.24 trillion, followed by Japan with $1.25 trillion, Switzerland with $883.9 billion, India with $605.8 billion, Russia with $590 billion, Taiwan with $566.5 billion, and Saudi Arabia with $426.9 billion.