South Korea's foreign exchange reserves rebounded last month, rising about $4.2 billion from the previous month, as gains from management returns and the dollar-converted value of other currency assets offset dollar outflows used to defend the won against a strong dollar.
According to the Bank of Korea on the 7th, foreign exchange reserves stood at $427.88 billion at the end of April, up $4.22 billion from the end of the previous month. In March, reserves had fallen by $3.97 billion due to a decline in the U.S. dollar-converted value of other currencies amid dollar strength and a foreign exchange swap with the National Pension Service, but they turned to an increase after just one month.
A Bank of Korea official said, "Despite continued market stabilization measures including the foreign exchange swap with the National Pension Service, reserves grew thanks to an increase in the dollar-converted value of non-dollar foreign currency assets and management returns."
Indeed, the dollar index (DXY), which measures the dollar's value against six major currencies, fell 1.5% in a month from 100.51 at the end of March to 98.96 at the end of April. This boosted the dollar-converted value of assets in the euro and other currencies.
Breaking down reserves by asset type, securities such as government and corporate bonds rose $6.37 billion to $384.07 billion. Deposits fell $2.29 billion to $18.76 billion, while International Monetary Fund (IMF) Special Drawing Rights (SDR) increased $240 million to $15.81 billion. Gold remained unchanged at $4.79 billion, as it is recorded at the purchase price rather than the market price.
As of the end of March, South Korea's foreign exchange reserves ranked 12th in the world at $423.7 billion. The country fell from 10th in February to 12th, dropping out of the top 10 for the first time since the 2000s, and maintained the same ranking in March.
The Bank of Korea noted that some countries in the comparison value their gold holdings at market prices, and the recent rise in gold prices has helped push up their rankings.
