South Korea's Foreign Reserves Rise Slightly in June Despite Market Intervention

South Korea's foreign exchange reserves saw a modest increase in June, reaching $427.36 billion, a rise of $370 million from the previous month. This growth occurred even as the Bank of Korea intervened in the market to support the won against a strengthening U.S. dollar.

The central bank attributed the increase primarily to a rise in foreign currency deposits held by financial institutions. Measures like the foreign currency swap agreement with the National Pension Service, which helps reduce demand for dollars in the market, were also in place.

The increase in financial institutions' foreign currency deposits is believed to be a ripple effect of strong exports, leading to higher foreign currency holdings by corporations. By the end of June, securities constituted the largest portion of the reserves at $380.34 billion, or 89%, followed by deposits and IMF special drawing rights.

As of the end of May, South Korea ranked 13th globally in foreign exchange reserves, trailing only Singapore among Asian nations. China holds the largest reserves worldwide, followed by Japan and Switzerland.

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The increase was due to a rise in foreign currency deposits by financial institutions, despite market stabilization measures like the foreign currency swap with the National Pension Service.