S. Korea foreign reserves drop for second month in January

South Korea’s foreign reserves declined for a second straight month in January as authorities took steps to stabilize the foreign exchange market, the Bank of Korea said on Wednesday.

The country’s reserves stood at $425.91 billion at the end of January, down $2.15 billion from a month earlier, according to central bank data, News.Az reports, citing Yonhap.

The drop followed a decline in December, the first monthly fall since June.

A Bank of Korea official said the decrease was largely due to market stabilization measures, including foreign exchange swap operations with the National Pension Service.

The won had hovered for months near the psychologically important level of 1,450 per dollar before weakening to a multi-year low below 1,480 in late December, pressured by broad dollar strength, geopolitical risks, and heavy overseas securities investment by local investors.

In response, authorities issued strong verbal warnings and rolled out a series of policy measures. These included a one-year extension of a currency swap arrangement with the National Pension Service and discussions on creating a new framework to better align the pension fund’s investment returns with overall market stability.

Holdings of foreign securities, including U.S. Treasuries, rose by $6.39 billion from a month earlier to $377.52 billion at the end of January, accounting for 88.6% of total reserves.

By contrast, foreign currency deposits fell by $8.55 billion to $23.32 billion. Special drawing rights remained unchanged at $15.89 billion, while gold bullion holdings stayed flat at $4.79 billion.

South Korea’s reserve position with the International Monetary Fund increased slightly by $10 million to $4.3 billion at the end of the month.

As of the end of December, South Korea ranked as the world’s ninth-largest holder of foreign reserves. China topped the list, followed by Japan, Switzerland, Russia, and India, according to the Bank of Korea.

News.Az 

By Nijat Babayev