South Korea’s central bank disclosed that the country’s foreign exchange reserves plummeted to their lowest levels since June 2020, primarily driven by concerted efforts by South Korean authorities to stabilize the won and curb its depreciation.
As of the end of October, South Korea’s foreign exchange reserves amounted to $412.87 billion, marking a decline from the September-end figure of $414.12 billion.
The central bank of South Korea attributed the decline in foreign exchange reserves to measures aimed at reducing volatility in the foreign exchange market. One such measure involved a currency swap agreement with the Korean National Pension Fund. Additionally, assets held in foreign currencies experienced a decline in value when converted to dollars.
Throughout October, the South Korean won experienced a depreciation of 0.09% against the U.S. dollar. This depreciation followed a period of weakness, the most significant since November 2022. During the same timeframe, the Dollar Index, which gauges the performance of the U.S. dollar against a basket of six major currencies, rose by 0.49%.
The actions taken by South Korean authorities highlight their commitment to stabilize the country’s currency and financial markets. As the economic landscape continues to evolve, these interventions reflect ongoing efforts to ensure stability and growth in the South Korean economy. Observers will closely monitor future developments and their impact on the won and foreign exchange reserves in the coming months.