Korea’s Forex Reserves Fall for First Time in Four Months
South Korea’s foreign exchange reserves fell for the first time in four months. After rising for three consecutive months from June through August, reserves declined in September, driven by the transfer of assets to fund investment in the United States and a stronger dollar.According to the “Foreign
South Korea's foreign exchange reserves declined for the first time in four months in September, according to data released by the Bank of Korea on October 6. The reserves fell to $440.56 billion, down $1.72 billion from the previous month. This marked a stark contrast to the record monthly increase of $14.33 billion in August, largely driven by a rise in foreign currency deposits at financial institutions.
The decline was primarily due to the transfer of assets to fund investment in the United States and the strengthening of the dollar. The Korea-U.S. Strategic Investment Corporation received $2.4 billion for its first investment in the U.S., directed towards constructing a gas-fired combined-cycle power plant in Texas. The government minimized market disruption by utilizing existing foreign currency assets instead of purchasing dollars directly.
A stronger U.S. dollar, which climbed 1.7% to 101.37 in September, also contributed to the reduction. Assets such as securities and deposits experienced declines, with securities falling by $1.05 billion and deposits by $350 million. Gold reserves remained steady at $4.79 billion. The Bank of Korea has decided to halt monthly publication of country rankings based on foreign exchange reserves to prevent potential controversy and as the ranking is not a definitive measure of a country's foreign exchange stability.
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