South Korea's foreign exchange reserves rose by the largest monthly amount on record in August, reaching their highest level in more than four years, as a chip-led export boom swelled the dollar deposits companies placed with banks.
Reserves stood at $442.28 billion at the end of August, up $14.33 billion from the previous month, the Bank of Korea said on the 3rd in its report on reserves as of the end of August 2026. It was the third straight monthly gain, following increases of $370 million in June and $590 million in July, and the largest monthly rise since the data series began. In outstanding terms, it was the highest level since May 2022, when reserves totaled $447.71 billion.
The BOK attributed the increase to a sharp rise in foreign currency deposits held by financial institutions. Unlike foreign currency deposits held by companies or individuals, these refer to foreign currency funds that banks place with the central bank. "Dollar export proceeds from chipmakers such as Samsung Electronics and SK hynix were deposited heavily at banks, and as banks placed those swelling dollar funds with the BOK, reserves rose sharply," a BOK official said.
Banks are required to hold 2% to 7% of their balances at the central bank as reserve requirements, depending on the type of deposit. With dollar funds in ample supply, they are depositing amounts beyond that threshold at the BOK, the official said.
A weaker U.S. dollar from the previous month also contributed, raising the dollar-converted value of assets held in euros, yen and British pounds.
Separately, the BOK said it will stop publishing country-by-country rankings of foreign exchange reserves starting this month, ending a practice of 25 years. The central bank is understood to have reviewed internally whether the disclosure served any practical purpose after the swings in ranking widened this year. "Korea's foreign exchange soundness is stable, but changes in other countries' rankings due to factors such as gold price swings ended up affecting our own position," a BOK official said. "We judged that country rankings of foreign exchange reserves have no value as information for assessing external soundness, so we decided not to disclose them."
