SEOUL, SOUTH KOREA / RankWire.AI / – In South Korea, the foreign exchange reserves experienced a significant rise in August, reaching a total of $442.28 billion by month’s end. The Bank of Korea announced that reserves increased by $14.33 billion from $427.95 billion at the close of July. This boost represents the largest monthly increase since records began in 1971 and elevates South Korea’s holdings to their highest point since May 2022, showing a sharp acceleration compared to the smaller gains in the previous two months.
For the third consecutive month, South Korea’s reserves expanded, following increases of $370 million in June and $590 million in July. The August rise surpassed the previous monthly record of $14.29 billion, set in May 2009. Despite this recent growth, the total reserves are still below the record high of $469.21 billion achieved in October 2021. These figures reflect assets held in the country’s official foreign exchange reserves and are reported in U.S. dollars.
The Bank of Korea attributed the August surge to an uptick in foreign currency deposits, profits from reserve asset management, and fluctuations in exchange rates. Changes in currency values can influence the dollar valuation of assets held in euros, pounds, and other currencies. When reporting total reserves, the central bank converts these holdings into U.S. dollars. Consequently, major exchange rate movements can cause reported reserve figures to fluctuate, even when the actual foreign currency assets remain unchanged within the portfolio.
Securities and deposits fuel August’s surge
South Korea’s foreign exchange reserves remain predominantly composed of foreign securities. Their value increased by $7.07 billion in August, reaching $387.07 billion, which makes up 87.5% of total reserves. This category includes government and corporate securities held among official reserve assets. Foreign currency deposits also saw a substantial rise, climbing $7.17 billion to $30.30 billion, contributing significantly to the overall increase alongside securities.
Smaller adjustments were seen in other reserve components. Special drawing rights grew by $60 million to $15.77 billion, while the country’s reserve position was about $4.34 billion. Gold holdings remained steady at $4.79 billion. The combined increase in securities and foreign currency deposits accounted for almost all of the $14.33 billion monthly rise. The reserve structure continued to be heavily weighted toward securities, even as deposits experienced one of the largest individual component increases in August.
Reserves reach four-year high, nearing October 2021 peak
South Korea’s reserve balance in August was the highest in over four years and three months. The reserves last surpassed this level in May 2022, when they hit $447.71 billion. The latest figure also reduces the gap with the October 2021 record high. Official foreign exchange reserves include securities, deposits, gold, special drawing rights, and the country’s reserve position within the international monetary system. These figures are published monthly as part of routine reporting on South Korea’s external financial assets.
Recent data reveal a notable shift in the pace of reserve growth during the summer months. After modest increases in June and July, August saw a record monthly jump. As of August’s end, South Korea held $442.28 billion in foreign exchange reserves, which is nearly $14.3 billion more than the previous month. While still below the all-time peak, this level represents the highest since May 2022, supported by gains in securities, foreign currency deposits, and the dollar value of certain reserve assets.