Korea’s FX reserves fall on currency defense

Jan 06, 2026, 08:40 am

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Foreign exchange reserves declined by $430 million in May. / Yonhap

Korea’s foreign exchange reserves declined at the end of last year for the first time in seven months, reflecting authorities’ efforts to curb heightened exchange-rate volatility as the won came under pressure near the 1,500-per-dollar level.

According to the Bank of Korea on Jan. 6, the country’s foreign exchange reserves stood at $428.05 billion at the end of December, down about $2.6 billion from the previous month’s $430.66 billion. Reserves had fallen to around $404.6 billion in May last year before rising for six consecutive months through November, but reversed course in December as volatility in the FX market intensified.

The central bank said the decline came despite increases in foreign-currency deposits by financial institutions at quarter-end and gains from the dollar conversion of non-dollar assets. “Measures to ease FX market volatility led to a reduction in reserves,” it explained.

By asset class, holdings of foreign securities such as government and corporate bonds fell sharply by $8.22 billion month on month to $371.12 billion. Deposits increased by $5.44 billion to $31.87 billion, while Special Drawing Rights at the International Monetary Fund rose by $150 million to $15.89 billion. Gold holdings remained unchanged at $4.79 billion, as they are recorded at purchase prices rather than market value.

As of the end of November, Korea ranked ninth globally in foreign exchange reserves. China topped the list with $3.3464 trillion, followed by Japan ($1.3594 trillion), Switzerland ($1.0588 trillion), Russia ($734.6 billion), India ($687.9 billion), Taiwan ($599.8 billion), Germany ($552.3 billion) and Saudi Arabia ($463.7 billion).

#foreign exchange reserves #exchange rate defense #Korean won #Bank of Korea #currency volatility