FX rates displayed at a currency exchange shop in Seoul’s Myeong-dong on Jan. 5, 2026. AJP You Na-hyunSEOUL, January 06 (AJP) -South Korea’s foreign exchange reserves fell by $2.6 billion in December from the previous month — the first decline in seven months — signaling stepped-up dollar-selling intervention to shore up the won, which had hovered near crisis-era lows.
According to a report released Tuesday by the Bank of Korea, the country’s foreign exchange reserves stood at $428.05 billion at the end of December, down from $430.66 billion a month earlier.
The reserves had dropped to $404.6 billion at the end of May, the lowest level in nearly five years, after the dollar surged to the 1,480-won range in April amid a tariff barrage from the new Trump administration. They then recovered steadily, topping $430 billion for the first time in three years and three months in November. That milestone proved short-lived, however, as the dollar revisited the 1,480-won range late in the year.
Authorities encouraged the National Pension Service and other institutional investors to hedge their dollar exposure to stabilize the won as it edged closer to the psychologically sensitive 1,490-per-dollar level, while mobilizing a range of incentives to prompt the sale of dollar assets.
A Bank of Korea official attributed part of the earlier increase in reserves to quarter-end effects, including a rise in foreign-currency deposits at financial institutions and valuation gains from converting non-dollar assets into U.S. dollars.
At the same time, measures aimed at curbing foreign-exchange market volatility weighed on the total. These included smoothing operations in both the spot and forward markets, as well as hedging activity by the pension fund, the official said.
By asset class, securities — such as government and corporate bonds — fell by $8.22 billion to $371.12 billion, suggesting the divestment of foreign-currency-denominated papers to secure ammunition for won-stabilization efforts. Deposits, by contrast, increased by $5.44 billion to $31.87 billion. Holdings of the International Monetary Fund’s special drawing rights rose $150 million to $15.89 billion, while gold holdings were unchanged at $4.79 billion, as they are recorded at purchase price rather than market value.
As of the end of November, South Korea’s foreign exchange reserves ranked ninth globally at $430.7 billion. China topped the list with $3.3464 trillion, followed by Japan ($1.3594 trillion), Switzerland ($1.0588 trillion), Russia ($734.6 billion), India ($687.9 billion), Taiwan ($599.8 billion), Germany ($552.3 billion) and Saudi Arabia ($463.7 billion).
The dollar has returned toward the 1,450-won level after all-out year-end stabilization efforts from authorities upon a renewed flight to safe-haven assets following the Venezuela crisis.
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