South Korea experienced the most significant drop in its foreign reserves in about a year during March, with reserves falling to US$423.66 billion by the end of the month, a decrease of $3.97 billion from the previous month. This decline, the largest since April 2025, was attributed to a stronger U.S. dollar and efforts by authorities to stabilize exchange rate fluctuations.
The decrease in foreign reserves was influenced by the strengthening of the U.S. dollar, which lowered the value of South Korea’s foreign currency assets denominated in other currencies. Additionally, measures such as foreign exchange swaps with the National Pension Service contributed to market stabilization. Foreign securities, including U.S. Treasuries, dropped by $3.97 billion to $423.66 billion by the end of March, representing 89.2 percent of the country’s total foreign reserves.
The value of foreign currency deposits decreased by $1.44 billion to $21.05 billion, while special drawing rights (SDRs) fell by $200 million to $15.57 billion. Gold bullion holdings remained steady at $4.79 billion. South Korea’s reserve position with the International Monetary Fund (IMF) also declined by $60 million to $4.55 billion by the end of March.
South Korea, which ranked as the world’s 12th-largest holder of foreign reserves as of end-February, saw a drop from tenth place a month earlier. China led the list, followed by Japan, Switzerland, Russia, and India, according to the Bank of Korea. Despite a $1.7 billion increase in foreign exchange reserves in February, South Korea’s ranking was affected by the fact that some countries adjust their gold holdings based on market prices, leading to higher rankings due to recent gains in gold prices.
The South Korean won weakened against the U.S. dollar following remarks by U.S. President Donald Trump regarding military operations against Iran. Trump’s statements dampened hopes for a resolution to the conflict, causing the won to depreciate. Trump’s pledge to intensify actions against Iran without specifying a timeline for a ceasefire or resolution to the conflict that began in late February contributed to the won’s decline.
