Last month, an employee checks the dollar at Hana Bank’s counterfeit counterfeiting center in Jung-gu, Seoul. News 1
Korea’s foreign exchange reserves, which had been hitting a record high due to the decline in the dollar value, declined in 10 months last month. This is due to the strong influence of US President Joe Biden’s election and the’Blue Wave’ (the Democratic Party dominated the US Senate and House).
According to the Bank of Korea on the 3rd, the amount of foreign exchange reserves at the end of last month recorded 4427 billion dollars, down by 370 million dollars compared to last December. It was a record high for seven consecutive months since June of last year and then turned to a decline. This is the first time in 10 months since March of last year that the monthly foreign exchange reserves have decreased.
The biggest reason behind the decline in holdings is the increase in dollar value. The exchange rate of the won-dollar, which once soared to the second half of the 1,200 won range, fell to the 1,100 won range due to the strong dollar.
The dollar turned to strong as expectations for an economic recovery increased, such as the announcement of fiscal stimulus measures during the inauguration of the US Biden administration. In fact, last month, the US dollar index (dollar index), which represents the value of the dollar for six major currencies, was 90.46, up 0.9% from the previous month.
An official from the BOK explained that “the euro, pound, yen, and other foreign currency assets are converted into US dollars, and the dollar value of other foreign currency assets has decreased relatively due to the strong US dollar.
Among the foreign exchange reserves at the end of last month, securities including government bonds, government agency bonds, corporate bonds, and asset-backed securities were $4.45 billion (91.4%), a decrease of $5.27 billion from the end of last month. Korea’s foreign exchange reserves ranked 9th in the world as of the end of December 2020.
Kwak Joo-hyun reporter [email protected]
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