Korea's foreign reserve decline stops in July after four consecutive falls
Korea's foreign exchange reserves increased slightly in July, ending four straight months of decreases.
They totaled $438.6 billion as of the end of the month, up 0.07 percent on month, said the Bank of Korea on Wednesday.
The central bank attributed the July growth to increased profits from operations and higher foreign currency deposits by foreign financial institutions.
"Despite a fall in the amount converted to foreign exchange, like dollars, profit from operating foreign assets and foreign currency reserves held by financial institutions contributed" to the rise of Korea's foreign reserves in July, said the central bank.
Korea's foreign reserves are held in securities, deposits, Special Drawing Rights (SDR) and gold. SDRs are international reserve assets created by the IMF to supplement the official reserves of its member countries.
Securities were valued at $391.9 billion, deposits $23.2 billion, SDRs $14.4 billion and gold $4.8 billion.
In June, foreign reserves fell the most in more than a decade.
Intervention in the currency markets is reported on a quarterly basis one quarter delayed, but a fall in foreign reserves in recent months might be a consequence of selling dollars to buy won in defense of the currency.
In a statement released on July 5th, the central bank suggested that it is using foreign reserves to ease currency volatility — without explicitly mentioning intervention — adding that it has enough reserves to respond to external shocks.
The won fell 10 percent against the dollar since the beginning of the year. It traded at 1,326.10 won per dollar when the market closed on July 15, the lowest since 1,340.70 won on April 29, 2009.
Signing a currency swap deal with the United States was a possible agenda item during the visits to Korea by the U.S. President Joe Biden in May and U.S. Treasury Secretary in July. But the deal did not happen.
Korea had a currency swap deal with the United States from March 2020 to the last day of 2021.
Korea's foreign reserve holdings ranked ninth in the world as of the end of June. China was the first, followed by Japan, Switzerland and India.
BY JIN MIN-JI [email@example.com]