"Foreign Currency Deposits Surge" Forex Reserves Increase by $14.3 Billion...Largest Rise on Record

$442.28 Billion in Reserves at End-August...

Record Monthly Increase of $14.33 Billion

Highest Forex Reserves Since May 2022 ($447.71 Billion)

Rapid Rise in Export Settlement Boosts Domestic Forex Liquidity

Sharp Increase in Fo

Foreign exchange reserves surged by over $14.3 billion in just one month, marking the largest increase on record. Total foreign reserves also exceeded $440 billion, reaching the highest level in four years and three months. This was driven by a sharp increase in export companies’ current account receipts, supported by the 'semiconductor effect', which led to abundant liquidity in Korea’s foreign currency market. As a result, financial institutions’ foreign currency deposits with the Bank of Korea soared. In addition, investment income and a rise in the U.S. dollar-converted value of other foreign currency assets contributed to this record-breaking expansion of reserves.

According to the Bank of Korea on September 3, as of the end of August 2026, Korea’s foreign exchange reserves stood at $442.28 billion, up $14.33 billion from the previous month’s $427.95 billion. This is the largest monthly increase since comparable data began in 1971. The scale of foreign reserves is also the largest since May 2022, when reserves reached $447.71 billion.

This dramatic increase was primarily due to a significant jump in financial institutions’ foreign currency deposits last month. The recent surge in current account surplus, driven by robust semiconductor exports, led to a large inflow of current account payments from export companies. As these funds flowed into the domestic market, liquidity among foreign currency market participants increased notably. In this ample liquidity environment, the Bank of Korea’s policy—implemented at the end of last year—to pay interest on excess reserve deposits (the portion of statutory foreign currency reserve deposits with the Bank of Korea that exceeds the required amount) attracted attention and contributed to the sharp rise in financial institutions’ foreign currency deposits. A Bank of Korea official explained, “The increase in financial institutions’ foreign currency deposits was further supported by growing investment income and an increase in the U.S. dollar-converted value of other foreign currency assets.”

The U.S. dollar index (DXY), which measures the dollar against the currencies of six major countries, fell 0.2% over the past month, from 99.86 at the end of July to 99.70 at the end of August. Over the same period, the value of other major currencies rose against the dollar: the euro by 0.5%, the pound by 0.5%, and the Australian dollar by 1.9%. In contrast, the Japanese yen fell by 0.3%.

Breaking down by asset type, securities—including U.S. treasuries, corporate bonds, and government agency bonds—increased by $7.07 billion from the previous month, reaching $387.07 billion and accounting for 87.5% of the total reserves. Deposits (comprising 6.9% of total reserves) increased by $7.17 billion, totaling $30.3 billion. Special Drawing Rights (SDRs) allocated by the International Monetary Fund (IMF) accounted for $15.77 billion, or 3.6%. Gold stood at $4.79 billion (1.1%), and Korea’s IMF position was $4.34 billion (1.0%).

Meanwhile, the Bank of Korea announced that it will no longer release rankings by country for foreign exchange reserves, which had previously been published each month along with the scale of Korea’s reserves. A Bank of Korea official explained, “Even though a higher ranking does not mean the reserves are healthier and a lower ranking does not mean they are weaker, there has been a lot of external noise and misunderstanding that these rankings are meaningful. As of this month, we will not disclose country-by-country rankings.” As of the end of July, Korea’s ranking in foreign reserves was reportedly at a level similar to the previous month (10th).

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