Falling Reserves
South Korea's foreign currency reserves fell for four consecutive months due to the strong dollar.
According to the Bank of Korea (BOK) on Dec. 3, South Korea's foreign currency reserves fell to US$363.1 billion in the end of November, down US$630 million from US$363.72 billion at the end of last month. The amount had decreased for four consecutive months since July.
This trend has not happened since 2008, when the global financial crisis occurred, where the value of Korea's foreign currency reserves fell for eight months straight, from April to November 2008. Foreign reserves had previously recorded record highs for 13 consecutive months from July of last year, but decreased from August of this year.
A representative of the BOK explained the decrease in foreign currency reserves by saying, “This is because the dollar exchange amount of currency denomination assets such as the euro and pound has recently decreased due to the strong dollar, although the income from operating foreign currency assets such as bonds and interest has kept increasing.”
Among foreign currencies, the yen dropped the largest. The value of the yen compared to the dollar dropped by 7.3 percent in November. Values of the euro and pound dropped by 1.2 percent and 1.7 percent, respectively, from last month.
As of the end of October, South Korea's foreign currency reserve size ranked seventh. It has maintained the seventh rank for 3 years since November 2011, a one step rise from eighth in October 2011.
The country with the largest foreign currency reserves is China with US$3.8877 trillion as of the end of September, followed by Japan with US$1.2659 trillion, Switzerland with US$523.3 billion, Russia with US$428.6 billion, Taiwan with US$421.5 billion, and Brazil with US$375.8 billion.