South Korea’s foreign exchange reserves rose in March for the first time in three months but remained below the $410 billion mark, which was breached in February.
According to the Bank of Korea on April 3, the country’s forex reserves stood at $409.6 billion at the end of March, up $450 million from a month earlier.
In February, forex reserves fell by $1.8 billion to $409.2 billion, dropping below $410 billion for the first time since May 2020 and reaching their lowest level in four years and nine months. Reserves had grown by $1.2 billion in December but then declined by $4.6 billion in January and $1.8 billion in February.
The March increase is attributed to a weaker greenback and quarter-end factors. Financial institutions tend to boost their foreign currency deposits at the end of a quarter to meet international banking requirements. In March, the U.S. dollar weakened by about 3%, which increased the converted value of South Korea’s assets held in other currencies, such as the euro and yen.
“Financial institutions increased their foreign currency deposits due to quarter-end effects and foreign exchange swap transactions with the National Pension Service,” a BOK official explained. “The weaker dollar also increased the value of non-dollar assets and improved investment returns.”
Most of the forex reserve increase came from government bonds and other securities. As of March, securities accounted for $361.53 billion, or 88.3% of total reserves, down $4.15 billion from February. Foreign currency deposits, considered cash equivalents, stood at $24.17 billion, down $3.84 billion. Gold holdings remained unchanged at $4.79 billion, as they are recorded at purchase price.
As of February, South Korea had the ninth-largest forex reserves in the world.
