SEOUL, SOUTH KOREA / RankWire.AI / – In August, South Korea’s foreign exchange reserves experienced their largest monthly growth on record, reaching a total of $442.28 billion by month’s end, according to the Bank of Korea. This marked a $14.33 billion rise from $427.95 billion at the close of July, making it the most significant monthly increase since the series started in 1971. The figure also stands at its highest since May 2022.
This surge in reserves continued a three-month recovery trend, following increases of $370 million in June and $590 million in July. The August boost exceeded those gains considerably and set a new monthly record, surpassing the previous high of $14.29 billion established in May 2009. Despite this impressive growth, reserves still remained below the October 2021 peak of $469.21 billion.
The Bank of Korea attributed the August increase to several quantifiable factors. Foreign currency deposits held by financial institutions grew during the month, while returns on reserve assets contributed further to the total. Currency fluctuations also played a role by boosting the dollar value of assets denominated in other currencies. Since the Bank measures reserves in U.S. dollars, exchange rate shifts can affect their reported value without altering the actual amount of foreign assets held.
Foreign securities remain the main component of reserves
By the end of August, foreign securities constituted the bulk of South Korea’s foreign exchange reserves. Their value increased by $7.07 billion from July, reaching $387.07 billion, which accounts for 87.5% of the total reserve holdings. This category includes government and corporate securities maintained as reserve assets. Additionally, foreign currency deposits saw a significant rise, climbing $7.17 billion in August to $30.30 billion at month’s end.
Special drawing rights (SDRs) increased by $60 million to $15.77 billion, while South Korea’s reserve position stood at approximately $4.34 billion. Gold holdings remained steady at $4.79 billion. Despite the substantial rise in deposits, securities continued to dominate the reserve composition. The combined growth of securities and foreign currency deposits largely explains the $14.33 billion increase in South Korea’s official foreign reserves for August.
Reserves hit a four-year high with August’s growth
The reserve total of $442.28 billion is the highest since May 2022, when reserves stood at $447.71 billion, marking a four-year and three-month peak. The latest figures bring South Korea closer to the levels seen prior to the decline following the October 2021 record high. Official foreign reserves encompass securities, deposits, gold, SDRs, 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 releases these figures monthly, providing a regular gauge of the country’s reserve status. August’s figures reflect both a record monthly increase and the highest overall reserve balance since May 2022, representing a significant shift from the smaller increases seen in June and July, although still below South Korea’s historical peak.