S. Korea's foreign reserves rise in June despite FX market-stabilizing measures

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South Korea's foreign reserves rose in June despite ongoing efforts by authorities to manage exchange rate volatility, the central bank said on Friday. The country's foreign reserves stood at US$427.36 billion as of end-June, up $370 million from a month earlier, according to data from the Bank of Korea (BOK). The figure marked a turnaround from an $880 million decline in May.

Coverage Comparison

Two reports from Yonhap News — English covered different aspects of the central bank's data releases. The first, published on June 30, detailed the authorities' net dollar selling in the first quarter and its impact on reserves. The second, published on July 3, reported the end-June reserve levels and the monthly increase.

The June report highlighted the cumulative net dollar selling over six consecutive quarters and the won's sharp depreciation following the U.S.-Iran war. The July report focused on the reversal of the May decline and attributed the increase to a rise in foreign currency-denominated deposits by financial institutions, despite market stabilization measures such as foreign exchange swaps with the National Pension Service.

Key Claims

According to the June 30 Yonhap report, the South Korean authorities sold a net US$13.6 billion in the first quarter to stabilize the foreign exchange market. This marked the sixth consecutive quarter of net dollar selling since the fourth quarter of 2024, bringing the cumulative total to a net $45.35 billion over the period, based on data released by the BOK.

The Korean won weakened to 1,530.1 won against the U.S. dollar at the end of March, down from 1,439 won at the end of the previous year. South Korea's foreign reserves fell by nearly $4 billion in March amid the authorities' intervention in response to the sharp depreciation of the won following the outbreak of the U.S.-Iran war. The March decline was the largest monthly drop in foreign reserves in 11 months, since April of the previous year, when they fell by $5 billion.

The July report noted that the Korean won traded far over the psychologically important level of 1,500 won against the U.S. dollar throughout June amid net selling of local stocks by foreign investors. The local currency dropped to 1,549.4 won per dollar on the last day of June, marking the weakest level since March 6, 2009.

Foreign securities, including U.S. Treasuries, fell by $330 million from a month earlier to $380.34 billion at end-June, accounting for 89 percent of the country's total foreign reserves. The value of foreign currency deposits rose $920 million to $22.27 billion, while special drawing rights (SDRs) decreased $140 million to $15.64 billion. Gold bullion holdings remained unchanged at $4.79 billion. The country's reserve position with the International Monetary Fund (IMF) decreased by $90 million from a month earlier to $4.31 billion at the end of June.

South Korea ranked as the world's 13th-largest holder of foreign reserves as of end-May, down from 12th place a month earlier. China topped the list, followed by Japan, Switzerland, Russia and India, according to the BOK.