Foreign Exchange Authorities Spent $13.6 Billion Defending Exchange Rate in Q1...Fourth Largest on Record

Net Dollar Selling Streak Continues for Six Consecutive Quarters

The foreign exchange authorities made a net sale of approximately 20 trillion won worth of US dollars in the first quarter of this year to defend the exchange rate.

The exterior view of the Bank of Korea.

According to the "Market Stabilization Measures for the First Quarter of 2026" released by the Bank of Korea on June 30, the foreign exchange authorities made a net sale of $13.628 billion in the first quarter of this year to stabilize the foreign exchange market. Converted at the average exchange rate for the first quarter, this amounts to about 20 trillion won.

This is the fourth largest net quarterly sale on record, following $22.467 billion in the fourth quarter of 2025, $17.54 billion in the third quarter of 2022, and $15.409 billion in the second quarter of 2022.

The authorities' net sale of dollars to defend the exchange rate has continued for six consecutive quarters since the fourth quarter of 2024. After a net sale of $3.755 billion at the end of 2024 to counter a sharp rise in exchange rates caused by the declaration of martial law, the authorities reduced the scale to $797 million in the second quarter of last year. However, in the second half of the year, as domestic overseas investments expanded and large-scale US-bound investments were confirmed following tariff negotiations with the United States, market anxiety intensified and the exchange rate surged again, prompting the authorities to launch the largest intervention on record at the end of last year.

Although the scale was smaller than in the fourth quarter of last year, the authorities continued large-scale net dollar sales in the first quarter of this year because the upward trend in the KRW-USD exchange rate did not subside. The average exchange rate (based on weekly closing prices) rose from 1,451.96 won in the fourth quarter of last year to 1,466.9 won in the first quarter of this year.

Despite the authorities' efforts to defend the exchange rate, the KRW-USD rate has not stabilized in the second quarter. The strong US dollar caused by the war in the Middle East and large-scale profit-taking by foreign investors in the domestic stock market have increased the downward pressure on the Korean won. The average exchange rate in June was 1,527.9 won, the highest since February 1998 during the foreign exchange crisis.

This content was produced with the assistance of AI translation services.