SEOUL, April 3 (AJP) — South Korea’s foreign exchange reserves fell by nearly $4 billion in March, underscoring the growing strain on the country’s external buffers as authorities continue to defend the won against crisis-era pressure.
The Bank of Korea said Friday that reserves stood at $423.66 billion at end-March, down $3.97 billion from $427.62 billion a month earlier. That marked the steepest monthly decline since April 2024, when reserves fell by $5.99 billion as the won also plunged amid global market turmoil following the U.S. Federal Reserve’s decision to keep interest rates at a two-decade high.
The drop came even after the government issued foreign exchange stabilization bonds in February, suggesting that the temporary boost from those proceeds was not enough to offset persistent intervention demand and valuation losses.
The BOK said the March decline reflected a lower dollar value of non-dollar assets as well as market-stabilization operations, including foreign exchange swaps with the National Pension Service.
The latest figures also highlighted how heavily authorities have leaned on liquid reserves. Securities, which accounted for 89.2 percent of total holdings, fell by $2.26 billion. Deposits — the most readily deployable portion of reserves — dropped by $1.44 billion, or 6.4 percent, to $21.05 billion from $22.49 billion a month earlier. Special Drawing Rights fell by $200 million to $15.57 billion, while the IMF reserve position stood at $4.55 billion.
The reserve decline comes as the won remains under intense pressure.
South Korean authorities sold a net $22.467 billion in the fourth quarter of 2025 for market stabilization, the largest quarterly intervention on record, according to the BOK’s latest disclosure. That compared with net dollar sales of $1.75 billion in the third quarter, $797 million in the second and $2.96 billion in the first.
The broader market backdrop remains hostile. The won this week slid past 1,520 per dollar, levels not seen since 2009, as South Korean markets reeled from the prolonged Middle East war and heavy foreign selling.
South Korea also slipped out of the global top 10 in reserve holdings. As of end-February, the country ranked 12th in the world, down from 10th a month earlier, according to the BOK. The central bank said some peers benefited from marking gold holdings to market as bullion prices rose.
The latest data suggest Seoul is still willing to spend reserves to smooth volatility, but they also show the cost of that defense is mounting as dollar demand stays elevated and the external shock drags on.
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