SEOUL: South Korea’s foreign exchange reserves fell in March as a stronger U.S. dollar reduced the converted value of non-dollar assets and authorities used reserves in operations to ease currency-market strain, central bank data showed on Friday. Official reserves stood at $423.66 billion at the end of March, down $3.97 billion from $427.62 billion a month earlier. The decline reversed a February increase and marked the sharpest monthly drop since April 2025, according to the Bank of Korea.
The Bank of Korea said the monthly decrease reflected both valuation effects and market-stabilization measures. It said the rise in the U.S. dollar lowered the dollar value of assets held in other currencies, while foreign exchange swap transactions with the National Pension Service also reduced reserves. Under that arrangement, the pension fund can obtain dollars from the central bank rather than buying them outright in the spot market, a mechanism used to limit pressure on the won during volatile periods.
Securities remained the largest component of the reserves at $377.69 billion at the end of March, followed by deposits at $21.05 billion. Special drawing rights totaled $15.57 billion, gold holdings were unchanged at $4.79 billion, and South Korea’s reserve position at the International Monetary Fund stood at $4.55 billion. The March data showed declines in securities, deposits and the IMF position from the previous month, while gold holdings were unchanged and SDR holdings eased slightly.
Reserve Decline Follows Brief February Rebound
The March fall came one month after South Korea’s reserves posted their first increase in three months. In February, reserves rose by $1.72 billion, supported by investment returns and proceeds from foreign currency-denominated Exchange Stabilization Fund bonds, the central bank said at the time. March’s pullback therefore erased that rebound and brought the stock of reserves back below $425 billion, leaving the overall level slightly lower than where it stood before the February increase.
South Korea ranked as the world’s 12th-largest holder of foreign exchange reserves as of the end of February, the latest month available for the international comparison cited by the Bank of Korea. That was down from 10th place a month earlier. The comparison was based on end-February holdings, when South Korea’s reserves stood at $427.62 billion before the March decline, and it highlighted a change in standing even before the latest monthly drop was recorded.
Won Volatility Keeps Reserves In Focus
The reserves data were released after a turbulent month in South Korean markets. During March, the won weakened past 1,500 per U.S. dollar for the first time since 2009 as investors reacted to heightened global uncertainty, while domestic equities also came under heavy selling pressure. Against that backdrop, the Bank of Korea’s reference to stabilization measures showed that official currency operations, together with valuation changes tied to the stronger dollar, affected the headline reserves total.
March’s decline left South Korea with $423.66 billion in foreign exchange reserves at the end of the first quarter, down from $427.62 billion in February. The Bank of Korea attributed the move to the stronger U.S. dollar and foreign exchange swap operations involving the National Pension Service, while the detailed composition showed lower holdings of securities and deposits than a month earlier. The monthly figures kept attention on reserve movements as the won remained under pressure in March and authorities managed volatility in the foreign exchange market. – By Content Syndication Services.