SEOUL, SOUTH KOREA / RankWire.AI / – In August, South Korea’s foreign exchange reserves experienced their largest monthly growth on record. The total reached $442.28 billion at the end of the month, according to the Bank of Korea. This marked a $14.33 billion rise from $427.95 billion at the close of July. The increase is the highest monthly jump since the reserve data series started in 1971, and it also represents the highest level since May 2022.
This surge in August continued a three-month recovery trend in South Korea’s foreign reserves, following increases of $370 million in June and $590 million in July. The August expansion far exceeded those figures and surpassed the previous record of $14.29 billion set in May 2009. Despite this significant rise, reserves are still below the peak of $469.21 billion recorded in October 2021.
The Bank of Korea attributed the growth to multiple measurable factors during August. Financial institutions increased their holdings of foreign currency deposits throughout the month. Additionally, returns on reserve assets contributed to the overall increase. Currency fluctuations also played a role, raising the dollar value of assets denominated in other currencies. Since the Bank measures the country’s reserve holdings in U.S. dollars, exchange rate movements can affect the reported value without altering the actual quantity of foreign assets.
Foreign securities continue to be the largest component of reserves
Foreign securities made up the majority of South Korea’s foreign exchange reserves at the end of August. Their value increased by $7.07 billion from July to $387.07 billion, accounting for 87.5% of the total reserve holdings. This category encompasses government and corporate securities held as reserve assets. Foreign currency deposits also saw a substantial rise, climbing by $7.17 billion in August to reach $30.30 billion at month’s end.
Special drawing rights grew by $60 million to $15.77 billion during August. South Korea’s reserve position stood at around $4.34 billion, with gold holdings remaining steady at $4.79 billion. The data indicates that securities continue to dominate the reserve portfolio despite the notable increase in deposits. The combined rise in securities and foreign currency deposits made up nearly all of the $14.33 billion monthly increase in the country’s official foreign reserves.
Reserves hit four-year high after August surge
With a total of $442.28 billion, South Korea’s foreign exchange reserves reached their highest point in over four years. The last time the country reported a higher total was in May 2022, with reserves at $447.71 billion. These latest figures also bring South Korea closer to pre-decline levels following the October 2021 peak. Official foreign reserves include securities, deposits, gold, special drawing rights, and the country’s reserve position within the international monetary system.
Foreign exchange reserves serve as official assets in foreign currencies that support international payments and external financial commitments. South Korea’s monthly reporting provides a regular indicator of its reserve status. The August increase not only set a new monthly record but also marked the highest overall reserve balance since May 2022. This marks a notable shift from the modest reserve gains in June and July, although the total remains below South Korea’s historical peak.