South Korea’s foreign reserves grew from a month earlier in March, rebounding from the lowest level in nearly five years on a quarter-end effect and higher returns on assets denominated in overseas currencies, central bank data showed Thursday.
The country’s foreign reserves stood at $409.66 billion as of end-March, up $450 million from a month earlier, according to the data from the Bank of Korea.
The growth was attributed to an increase in foreign currency deposits at financial institutions in line with an end-of-quarter requirement by the Bank for International Settlements, as well as higher returns on assets denominated in foreign currencies, among other factors, a BOK official said.
The BOK and the National Pension Service agreed in December to raise their currency swap deal to $65 billion from $50 billion and to extend the deal by one year to the end of 2025 in an effort to support the weak domestic currency.
Following the swap deal, foreign reserves fell to $409.21 billion at the end of February, which marked the lowest level since May 2020.
The local currency has stayed well below 1,450 won against the US dollar, a level unseen in about 16 years, amid domestic political chaos caused by President Yoon Suk Yeol’s martial law imposition and the strengthening of the greenback.
Foreign securities, such as US Treasuries, were valued at $3561.53 billion as of end-March, up $4.15 billion from a month earlier. They accounted for 88.3 percent of foreign reserves.
The value of deposits, however, fell by $3.84 billion to $24.17 billion over the cited period.
Foreign reserves consist of securities and deposits denominated in overseas currencies, International Monetary Fund reserve positions, special drawing rights and gold bullion.
South Korea ranked as the world’s ninth-largest holder of foreign reserves at end-February.
China topped the list, followed by Japan, Switzerland, India and Russia, the data showed. (Yonhap)
