SEOUL, SOUTH KOREA / RankWire.AI / – In August, South Korea’s foreign exchange reserves experienced a record monthly increase, reaching $442.28 billion by month-end. The Bank of Korea announced a rise of $14.33 billion from $427.95 billion at the close of July. This growth was the largest since official reserve records began in 1971 and pushed the nation’s holdings to their highest point since May 2022, representing a significant acceleration compared to the smaller increases in the previous two months.
For the third consecutive month, South Korea’s reserves expanded, following increases of $370 million in June and $590 million in July. The August boost also surpassed the former monthly record of $14.29 billion, set in May 2009. Despite this latest rise, the total reserves remained below the all-time high of $469.21 billion reached in October 2021. These figures reflect the assets available within the country’s official foreign exchange reserve holdings and are reported in U.S. dollars.
The Bank of Korea attributed the August reserve growth to increased foreign currency deposits, gains from reserve asset management, and fluctuations in exchange rates. Movements in currency values can influence the dollar value of assets held in euros, pounds, and other currencies. When reporting total reserves, the central bank converts these holdings into U.S. dollars, which means that major exchange rate fluctuations can either inflate or deflate the reported reserve totals, even if the underlying foreign currency assets remain unchanged.
Securities and deposits fuel August’s record growth
The largest component of South Korea’s foreign exchange reserves continued to be foreign securities. Their value increased by $7.07 billion in August, reaching $387.07 billion, which accounts for 87.5% of the total reserves. This category includes government and corporate securities held among official reserve assets. Additionally, foreign currency deposits experienced a significant rise, climbing by $7.17 billion to $30.30 billion, largely contributing to the overall increase along with the securities.
Smaller adjustments were observed in other reserve components. Special drawing rights grew by $60 million to $15.77 billion, while the reserve position stood at approximately $4.34 billion. Gold holdings remained steady at $4.79 billion. Overall, securities and foreign currency deposits made up nearly the entire $14.33 billion monthly increase. The reserve composition remained heavily weighted toward securities, even as deposits posted one of the largest individual component increases during August.
Reserve levels hit their highest since May 2022
South Korea’s August reserve balance marked the highest in over four years. The reserves last exceeded this level in May 2022, when they reached $447.71 billion. The August figure also narrowed the gap with the record high of $469.21 billion set in October 2021. Official foreign exchange reserves encompass securities, deposits, gold, special drawing rights, and the country’s reserve position in the international monetary system. These figures are published monthly as part of the country’s routine reporting on external financial assets.
Recent data reveal a notable shift in the pace of reserve accumulation during summer months. June and July recorded modest increases, but August delivered a record monthly rise. By the end of August, South Korea’s foreign exchange reserves stood at $442.28 billion, reflecting an increase of nearly $14.3 billion from the previous month. While still below the peak levels seen historically, this marks the highest level since May 2022, driven by gains in securities, foreign currency deposits, and the dollar valuation of select reserve assets.