The Bank of Korea announced on April 3 that South Korea’s foreign exchange reserves decreased US$8.96 billion to US$400.21 billion in March this year. The amount of decrease is the largest since November 2008, when the reserves showed a decline of US$11.75 billion. The amount of the reserves is the smallest since May 2018.
“Market stabilization measures taken by the foreign exchange authorities resulted in the decline along with a strong U.S. dollar that led to a decline in the U.S. dollar values of non-U.S. dollar-denominated foreign currency assets,” the central bank explained.
Last month, the value of the South Korean currency fell as the value of the U.S. dollar as a safe asset soared with COVID-19 spreading across the world. In addition, the euro, pound and yen depreciated vis-à-vis the U.S. dollar, leading to the decline in the U.S. dollar values constituting the foreign exchange reserves.
Marketable securities fell US$13.62 billion to US$357.6 billion whereas deposits increased US$4.62 billion to US$31.72 billion. The IMF SDR edged up US$40 million to US$3.32 billion. South Korea ranked ninth in the world in terms of foreign exchange reserves as of the end of February this year.