Foreign Exchange Reserves Fall Below $410 Billion for the First Time in 4 Years and 9 Months Due to Currency Defense [Hankyung FX Market Watch]

Foreign exchange reserves decreased to below $410 billion at the end of last month. Despite the weakness of the US dollar, foreign reserves shrank to the $400 billion range for the first time in 4 years and 9 months due to measures taken in response to increased exchange rate volatility.

According to the Bank of Korea's report on foreign exchange reserves at the end of February 2025 released on the 6th, foreign reserves at the end of last month were $409.21 billion. This represents a decrease of $1.8 billion from $411.01 billion at the end of January, breaking below the $410 billion mark.

This is the first time foreign exchange reserves have fallen below $410 billion since May 2020. At that time, foreign reserves stood at $407.31 billion, and had increased to $469.2 billion during the COVID-19 period, but have been rapidly decreasing recently.

The Bank of Korea explained, "Although the dollar-denominated value of assets in other currencies increased as the US dollar index showed weakness, falling by 0.5%, foreign exchange reserves decreased due to the expansion of foreign exchange swaps with the National Pension Service."

By category, securities decreased by $4.64 billion to $357.38 billion. Deposits recorded $28.01 billion, SDRs $14.84 billion, and IMF position $4.19 billion.

Reporter Jinkyu Kang josep@hankyung.com