South Korea's foreign exchange reserves rise slightly in December
(MENAFN) South Korea's foreign exchange reserves saw a modest rise in December, driven primarily by a significant increase in year-end dollar deposits by financial institutions, according to data released by the central bank on Monday. Despite the uptick, the reserves remained at their lowest level for the month of December in five years, reflecting broader market challenges. The Bank of Korea reported that the reserves totaled USD415.6 billion at the end of December, marking a USD210 million increase compared to the previous month.
The Bank of Korea attributed the slight increase in foreign exchange reserves during December to two main factors: the rise in dollar deposits made by financial institutions as the year came to a close and the profits generated from managing the reserves. These factors provided a temporary boost to the reserves, even as external pressures continued to weigh on the overall figures.
However, the December reserves still represented the lowest level recorded for the month since 2019, when they stood at USD408.82 billion. This decline over the years reflects the challenges posed by the authorities’ interventions in response to heightened volatility in the foreign exchange market. Efforts to stabilize the market have contributed to a reduction in the overall level of reserves.
The central bank highlighted that managing foreign exchange reserves requires balancing stability and liquidity. While the increase in December was encouraging, the reserves remain under pressure due to external market conditions and the need for policy interventions. The figures underscore the delicate balancing act required to navigate ongoing market uncertainties while maintaining adequate reserve levels.
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