SEOUL, SOUTH KOREA / RankWire.AI / – South Korea’s foreign exchange reserves posted their largest monthly increase on record in August. Reserves reached $442.28 billion at the end of the month, the Bank of Korea said. That marked a $14.33 billion increase from $427.95 billion at the end of July. The monthly rise was the biggest since the reserve data series began in 1971. The total also reached its highest level since May 2022.
The August increase extended a recovery in South Korea’s foreign reserves for a third consecutive month. Reserves rose by $370 million in June and another $590 million in July. The August gain was far larger than either increase. It also surpassed the previous record monthly rise of $14.29 billion set in May 2009. Despite the sharp increase, reserves remained below the record $469.21 billion reported in October 2021.
The central bank linked the increase to several measurable factors during August. Foreign currency deposits held by financial institutions increased during the month. Management returns on reserve assets also added to the total. Currency movements raised the dollar value of assets denominated in other currencies. The Bank of Korea measures the country’s reserve holdings in U.S. dollars, so exchange rate changes can alter their reported value without changing the underlying amount of foreign assets.
Foreign securities remain the largest reserve component
Foreign securities accounted for most of South Korea’s foreign exchange reserves at the end of August. Their value increased by $7.07 billion from July to $387.07 billion. That represented 87.5% of the country’s total reserve holdings. The category includes government and corporate securities held as reserve assets. Foreign currency deposits recorded another large increase. Those deposits climbed by $7.17 billion during August to reach $30.30 billion at the end of the month.
Special drawing rights increased by $60 million to $15.77 billion during August. South Korea’s reserve position stood at about $4.34 billion, while gold holdings remained unchanged at $4.79 billion. The composition shows that securities continued to dominate the reserve portfolio despite the strong increase in deposits. The combined rise in securities and foreign currency deposits accounted for nearly all of the $14.33 billion monthly increase recorded across the country’s official foreign reserves.
August gain lifts reserves to four-year high
The $442.28 billion reserve balance was the highest in four years and three months. South Korea last reported a higher total in May 2022, when reserves stood at $447.71 billion. The latest figures also brought the country closer to levels recorded before the decline that followed the October 2021 peak. Official foreign reserves include securities, deposits, gold, special drawing rights and the country’s reserve position within the international monetary system.
Foreign exchange reserves provide official authorities with foreign currency assets that can support international payments and external financial obligations. South Korea reports the figures monthly, giving markets a regular measure of the country’s reserve position. August produced both a record monthly increase and the highest overall balance since May 2022. The latest data therefore marked a notable change from the smaller reserve gains recorded in June and July, while leaving the total below South Korea’s historical peak.