Seoul: South Korea's foreign reserves saw an increase from the previous month in December, yet marked the lowest level in five years for a year-end figure, as reported by central bank data released on Monday. The Bank of Korea (BOK) indicated that the country's foreign reserves stood at US$415.6 billion by the end of December, an increase of $21 million from November.
According to Yonhap News Agency, the growth in reserves was due to the increased value of deposits from financial institutions and their rising operational returns, as stated by a BOK official. The report highlighted that foreign securities, including U.S. Treasuries, were valued at $366.7 billion at the end of December, showing a decrease of $5.72 billion compared to the previous month and accounting for 88.2 percent of the total foreign reserves.
Meanwhile, the value of deposits experienced a 6.1 percent increase, reaching $25.2 billion by the end of the month. South Korea's foreign reserves comprise securities and deposits denominated in foreign currencies, positions with the International Monetary Fund, special drawing rights, and gold bullion.
Despite the monthly rise, the year-end figure represented a substantial drop from $420.15 billion recorded at the end of 2023, marking the lowest year-end level since 2019 when reserves were at $408.82 billion. The BOK attributed this annual decline to the authorities' interventions in response to recent volatility in the foreign exchange market.
The South Korean won fell to its lowest level in nearly 16 years, dropping below 1,460 won against the U.S. dollar in December, amid domestic political uncertainty and the ongoing strengthening of the dollar. The dollar index, which measures the U.S. dollar's value against major global currencies, rose by approximately 2 percent last month.
At the end of December, South Korea was ranked as the ninth-largest holder of foreign reserves worldwide. China held the top position, followed by Japan, Switzerland, India, and Russia, as per the data.