The Korea Herald


Foreign exchange reserves fall for third consecutive month

By Song Seung-hyun

Published : Nov. 3, 2023 - 15:26

    • Link copied

Bank of Korea Governor Rhee Chang-yong speaks during a parliamentary audit held in Seoul on Oct. 23. ( Yonhap) Bank of Korea Governor Rhee Chang-yong speaks during a parliamentary audit held in Seoul on Oct. 23. ( Yonhap)

South Korea's foreign exchange reserves fell for the third consecutive month in October, according to data released by the Bank of Korea on Friday.

At the end of October, foreign exchange reserves stood at $412.87 billion, down $1.24 billion from the previous month's $414.12 billion.

South Korea's foreign exchange reserves remained in ninth place among major countries in October, also for the third consecutive month.

In June, South Korea surpassed Hong Kong to regain the eighth position after 10 months behind, but it slipped back to ninth after Hong Kong in just two months.

Despite the falling trend, the Bank of Korea does not seem to be worried. Just a week before the data was released, BOK Governor Rhee Chang-yong dispelled concerns raised during a parliamentary audit on Oct. 27 regarding the falling trend in foreign reserves.

The governor explained that foreign exchange reserves have not increased since 2021 and have remained stable.

"Increasing foreign exchange reserves comes at a cost. Our foreign exchange reserves are adequate," he said.

The decrease in the conversion value of various foreign currencies into US dollars contributed to the reduction of South Korea's foreign exchange reserves.

In October, the euro saw a 0.4 percent increase, while the yen and the Australian dollar both experienced a 0.1 percent and 0.4 percent decrease, respectively. Furthermore, the Chinese yuan depreciated by 0.5 percent.

The authorities also engaged in selling dollars to maintain stability in the exchange rate between the Korean won and the US dollar, which influenced the foreign exchange reserves to drop.

According to the BOK, the average exchange rate in October was 1,351.11 won per US dollar, which was about 20 won higher than the previous month's rate of 1,331.73 won.

Foreign reserves consist of securities and deposits denominated in overseas currencies, International Monetary Fund reserve positions, special drawing rights, and gold bullion.

US treasury bonds, government agency bonds, corporate bonds, and other securities, which account for the majority of foreign exchange reserves, decreased by $2.6 billion from the previous month, amounting to $369.98 billion.

Deposits denominated in overseas currencies increased by $1.47 billion, reaching a total of $188.7 billion.

The International Monetary Fund's special drawing rights decreased by $30 million from the previous month, totaling $14.77 billion, and IMF reserve positions reduced by $80 million, amounting to $4.45 billion.

Gold reserves remained unchanged at $4.79 billion, the same as the previous month.