South Korea's foreign exchange reserves experienced their largest monthly increase on record in August 2026, rising by $14.33 billion to reach $442.28 billion. This marks the highest level of reserves since May 2022, when they stood at $447.71 billion, and represents the third consecutive month of growth since June.
The primary driver of this significant surge was a sharp increase in foreign currency deposits by financial institutions. This was attributed to a robust current account surplus, fueled by strong semiconductor exports, which led to a substantial inflow of current account payments into the domestic market. The Bank of Korea's policy, implemented late last year, to pay interest on excess foreign currency reserve deposits also incentivized financial institutions to deposit more funds with the central bank. Additionally, investment income and the increased U.S. dollar-converted value of other foreign currency assets contributed to the expansion.
Breaking down the asset types, securities, including U.S. treasuries, corporate bonds, and government agency bonds, increased by $7.07 billion to $387.07 billion, accounting for 87.5% of total reserves. Deposits rose by $7.17 billion to $30.3 billion, making up 6.9% of the total. Special Drawing Rights (SDRs) stood at $15.77 billion (3.6%), and Korea's IMF position was $4.34 billion (1.0%). Gold reserves remained unchanged at $4.79 billion (1.1%).
The U.S. dollar index (DXY) saw a slight decrease of 0.2% in August, falling from 99.86 to 99.70. This meant that other major currencies generally strengthened against the dollar, with the Euro and Pound both rising by 0.5%, and the Australian dollar increasing by 1.9%. The Japanese yen, however, depreciated by 0.3% against the dollar. The Bank of Korea has also announced that it will no longer publish country-by-country rankings for foreign exchange reserves, citing potential misinterpretations of these rankings regarding a country's external soundness.
