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South Korea's Foreign Reserves Drop First Time in 7 Months in December

South Korea's foreign reserves declined in December for the first time in seven months, dropping to $428.05 billion. The Bank of Korea attributed the decrease to market stabilization measures aimed at curbing foreign exchange volatility. The South Korean won had faced significant pressure, nearing a 16-year low against the U.S. dollar in the previous month. The drop was primarily driven by an $8.22 billion decrease in holdings of foreign securities like U.S. Treasuries.

Key Points: S. Korea Foreign Reserves Fall in Dec Amid FX Volatility

  • First monthly decline since June
  • Reserves fell to $428.05 billion
  • Authorities intervened to support the won
  • Foreign securities holdings dropped significantly
  • South Korea ranks 9th globally in reserves
2 min read

S. Korea's foreign reserves fall for 1st time in 7 months in Dec: BOK

South Korea's foreign reserves fell to $428.05B in December, marking the first decline in seven months as authorities intervened to stabilize the currency market.

"Measures aimed at curbing volatility in the foreign exchange market acted as a factor pulling foreign reserves down - BOK official"

Seoul, Jan 6

South Korea's foreign reserves fell for the first time in seven months in December, the central bank said on Tuesday, amid increased volatility in the foreign exchange market that prompted authorities to take a series of market stabilisation measures.

The country's foreign reserves had come to US$428.05 billion as of end-December, down $2.6 billion from a month earlier, according to the data from the Bank of Korea (BOK), reports Yonhap news agency.

It marked the first on-month decline since June, after reserves had risen for six consecutive months to reach their highest level since August 2022 at the end of November.

"Measures aimed at curbing volatility in the foreign exchange market acted as a factor pulling foreign reserves down," a BOK official said, without elaborating.

The local currency fell below the psychologically important 1,450 won level against the U.S. dollar in November for the first time since April and neared the weakest level in about 16 years of about 1,480 won last month

In response, authorities made strong verbal interventions and appeared to have taken steps to support the currency. On Dec. 30, the final trading day of 2025, the won was quoted at 1,439.0 per dollar, down 9.2 won from the previous session.

Foreign securities, such as U.S. Treasuries, went down $8.22 billion from a month before to $371.12 billion at end-December, accounting for 86.7 percent of total foreign reserves.

The value of foreign currency deposits, however, rose by $5.44 billion to $31.87 billion, while special drawing rights (SDRs) edged up by $150 million to $15.89 billion.

Gold bullion holdings remained unchanged at $4.79 billion.

The country's International Monetary Fund (IMF) reserve positions grew $20 million from a month earlier to $4.37 billion at end-December, the data showed.

South Korea ranked as the world's ninth-largest holder of foreign reserves at end-November. China topped the list, followed by Japan, Switzerland, Russia and India, according to the BOK.

- IANS

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Reader Comments

P
Priya S
A small monthly decline after six months of growth doesn't seem alarming. South Korea's reserves are still massive at over $428 billion. The key is how they manage the volatility.
A
Aman W
This shows how interconnected global economies are. When the dollar strengthens, it puts pressure on currencies like the Won and the Rupee. Our exporters might feel the pinch too.
S
Sarah B
The article mentions "verbal interventions" to support their currency. I wish the reporting was a bit more detailed on what those specific measures were. A bit vague for a financial news piece.
V
Vikram M
Good to see gold holdings remained stable. In times of uncertainty, gold is the real safe haven, not just paper assets. More countries should increase their gold reserves like India has been doing.
K
Karthik V
The fall in foreign securities (like US Treasuries) by over $8 billion is significant. They probably sold some to defend the Won. It's a tough balancing act for any central bank.

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