South Korea FX reserves log biggest monthly drop in 19 months on intervention
5:06 pm Monday, May 06th, 2024
SEOUL (Reuters) – South Korea’s foreign exchange reserves dropped in April by the biggest amount in 19 months as authorities intervened in the currency market to curb weakness in the won currency.
Reserves stood at $413.26 billion at the end of April, down $5.99 billion from $419.25 billion a month earlier, central bank data showed on Tuesday. It was the biggest monthly fall since September 2022.
The Bank of Korea said the fall was due to market stabilising efforts, including the utilisation of its currency swap line with the country’s pension fund, along with a decline in foreign exchange deposits of financial institutions and a fall in the converted value of non-dollar assets.
In mid-April, the won hit a major psychological level of 1,400 to the dollar, its weakest level since early November 2022, prompting authorities to issue warnings against excessive volatility.
For the month, the won weakened 2.52% against the dollar, while the U.S. dollar index rose 1.76% amid market expectations for a delay in rate cuts and worries about heightening Middle East tensions.
The BOK said domestic economic fundamentals remained stable when compared with September 2022, while external debt and foreign exchange reserves were also at stable levels.
(Reporting by Jihoon Lee; Editing by Andrew Heavens)
