S.Korea Sept forex reserves post second-biggest monthly decline on record

SEOUL  – South Korea’s foreign exchange reserves shrank by nearly $20 billion in September, the second-biggest monthly drop on record, as authorities stepped up dollar-selling intervention to counter the won’s slump to a 13-1/2-year low.

The country’s FX reserves stood at $416.77 billion at the end of September, down $19.66 billion from $436.43 billion a month earlier, the Bank of Korea said on Thursday.

While still among the largest in the world, the country’s reserves fell to the lowest level since end-July 2020 and saw the second-biggest monthly decrease on record after a $27.42 billion decline in October 2008. Reserves have fallen in nine out of the last 11 months.

The central bank cited measures to ease volatility in the foreign exchange market, an apparent reference to dollar-selling intervention, as a factor that contributed to the losses, along with declines in the converted value of non-dollar assets and financial institutions’ foreign currency deposits.

The won ended September with a monthly loss of 6.5 percent against the dollar, the fastest in 11 years, after touching the weakest level since March 2009, while the U.S. dollar index rose 3.2 percent.