SEOUL, SOUTH KOREA / RankWire.AI / – In August, South Korea’s foreign exchange reserves experienced a record-breaking monthly increase, reaching a total of $442.28 billion by month’s end. The Bank of Korea announced an addition of $14.33 billion from the $427.95 billion recorded at the end of July. This expansion marked the largest increase since the official reserve records commenced in 1971 and pushed the reserves to their highest level since May 2022, reflecting a significant acceleration compared to the smaller gains seen over the previous two months.
South Korea’s reserves have now increased for three consecutive months, following a $370 million rise in June and a $590 million increase in July. The August growth also surpassed the previous monthly record of $14.29 billion, set in May 2009. Despite this recent surge, the reserves remain below the all-time peak of $469.21 billion reached in October 2021. These figures include assets available within the country’s official foreign exchange reserve holdings, expressed in U.S. dollars.
The Bank of Korea attributed the August boost primarily to increased foreign currency deposits, gains from reserve asset management, and fluctuations in exchange rates. Variations in currency values influence the dollar valuation of holdings in euros, pounds, and other currencies. When reporting total reserves, the central bank converts these holdings into U.S. dollars. Consequently, shifts in major exchange rates can alter the reported reserve figures even when the actual foreign currency assets remain unchanged within the portfolio.
Securities and deposits propel August’s reserve growth
Foreign securities continued to comprise the largest share of South Korea’s foreign exchange reserves. Their value increased by $7.07 billion in August, reaching $387.07 billion, which accounts for 87.5% of total reserves. This category encompasses government and corporate securities held as part of official reserve assets. Foreign currency deposits also saw a notable jump during the month, rising by $7.17 billion to $30.30 billion, making them a significant contributor to the overall increase alongside the securities’ growth.
Smaller movements were observed in other reserve components. Special drawing rights increased by $60 million to $15.77 billion, while the reserve position stood at roughly $4.34 billion. Gold holdings remained stable at $4.79 billion. The combined growth in securities and foreign currency deposits accounted for nearly the entire $14.33 billion monthly increase. The reserve composition remains heavily skewed toward securities, even as foreign currency deposits experienced one of the largest increases among individual assets during August.
Reserves hit their highest level since May 2022
South Korea’s August reserve balance marked the highest in over four years. The last time reserves surpassed this level was in May 2022, when they peaked at $447.71 billion. The August figure also narrowed the gap with the record high reported in October 2021. Official foreign exchange reserves include securities, deposits, gold, special drawing rights, and the country’s reserve position within the international monetary system. These figures are released monthly as part of the nation’s routine reporting on external financial assets.
Recent data reveal a notable change in the growth rate of reserves during the summer months. After modest increases in June and July, August delivered a record monthly rise. As of the end of August, South Korea held $442.28 billion in foreign exchange reserves, which is nearly $14.3 billion more than at the end of July. Although the total remains below the historical maximum, it represents the highest level since May 2022, supported by increases in securities, foreign currency deposits, and the dollar valuation of selected reserve assets.