Due to the strength of the U.S. dollar, the foreign exchange reserves decreased last month for the first time in three months.
According to the statistics of the “Foreign Reserves as of the End of January 2024” publication released by the Bank of Korea (BOK) on Feb. 5, South Korea’s foreign reserves stood at US$415.76 billion as of the end of last month, showing a decrease of US$4.39 billion from the end of December last year, which was US$420.15 billion. The decrease in foreign reserves compared to the previous month marks the first time in three months since October last year.
The decrease in foreign exchange reserves was influenced by the strengthening of the U.S. dollar last month, resulting in a reduction in other foreign currency assets when converted into U.S. dollars. The Dollar Index (DXY), which represents the value of the U.S. dollar against the currencies of six major countries, stood at 103.40 as of the end of last month, showing an increase of approximately 2.1 percent compared to the end of the previous month, which was at 101.23.
A BOK official explained, “The main reasons for the decrease include the reduction in the U.S. dollar conversion value of other currency foreign assets, decreased foreign currency deposits at financial institutions, and temporary decreases due to foreign exchange swaps with the National Pension Service.”
By asset type, securities such as government bonds and corporate bonds decreased by US$4.98 billion to US$368.68 billion compared to the previous month. Special drawing rights (SDR) for the International Monetary Fund (IMF) also decreased by US$150 million to US$14.94 billion. On the other hand, deposits increased by US$810 million to US$22.78 billion. In the case of gold, its value remained unchanged at US$4.79 billion, reflecting the purchase price at the time of acquisition without considering current market prices, the same as the previous month.
As of the end of December last year, South Korea’s foreign exchange reserves stood at US$420.1 billion, ranking 9th in the world. China had the highest reserves at US$3.24 trillion, followed by Japan with US$1.29 trillion, Switzerland with US$864.2 billion, India with US$622.5 billion, Russia with US$598.6 billion, Taiwan with US$570.6 billion, Saudi Arabia with US$436.9 billion, and Hong Kong with US$425.6 billion.