South Korea's foreign exchange reserves rose more than $14 billion last month, marking a third straight monthly gain and the highest level in four years. The increase was driven by larger foreign currency deposits at financial institutions and a higher dollar value of assets held in other currencies amid a weaker greenback.
Reserves stood at $442.28 billion at the end of August, up $14.33 billion from the previous month, according to data released by the Bank of Korea on the 3rd. It was the third consecutive monthly increase, following gains of $370 million in June and $590 million in July, and the highest level in four years and three months since May 2022, when reserves totaled $447.71 billion.
"Reserves rose sharply as foreign currency deposits and investment returns at financial institutions increased and the U.S. dollar value of foreign exchange assets held in other currencies grew," a Bank of Korea official said. As the dollar weakened from the previous month, the dollar-converted value of assets held in currencies such as the euro and the British pound increased.
Some analysts attribute the sharp gain to foreign exchange authorities purchasing, through a block deal, an amount equivalent to the dollars SK hynix raised through its American depositary receipt listing in the United States.
By asset type, securities including stocks and bonds rose $7.07 billion to $387.07 billion. Deposits climbed $7.17 billion to $30.3 billion. Special drawing rights at the International Monetary Fund rose $60 million to $15.77 billion. Gold holdings were unchanged at $4.79 billion. The central bank recently announced it would resume buying physical gold for the first time in 13 years, but it appears not to have made any purchases yet.
Separately, the Bank of Korea said it will stop publishing country-by-country rankings of foreign exchange reserves starting this month. "We decided not to disclose the rankings because we judged that country rankings of foreign exchange reserves have no value as information for assessing external soundness," a central bank official said.
