SEOUL — South Korea's foreign exchange reserves have surged for the fifth consecutive month, reaching a substantial $428.82 billion at the end of October. This robust increase of $6.8 billion from the previous month’s $422.02 billion has propelled the nation one notch higher in the global rankings, securing the ninth position worldwide.

The Bank of Korea (BOK) announced the figures on Tuesday, highlighting that the continuous growth, which began in June, is primarily attributable to increased returns on the management of reserve assets and the strategic issuance of Foreign Exchange Stabilization Bonds (Foreign EPS Bonds).

Recovery from a Five-Year Low 

The latest figures mark a significant turnaround for the nation's currency buffer. Earlier in May, the foreign reserves had dropped to $404.6 billion, the lowest level recorded in approximately five years. Since then, however, sustained efforts and favorable market conditions have driven a strong recovery, with the total reserves surpassing the $420 billion mark in September and maintaining an upward trajectory.

A BOK official explained the two main drivers behind the October increase: "Operational profits from the foreign assets saw an uptick, and the successful issuance of new foreign currency stabilization bonds contributed significantly to the overall reserve total." The stabilization bonds are often used by the government to manage the foreign exchange market and maintain stability.

Asset Composition Shifts 

An analysis of the reserve's composition reveals key shifts in the distribution of assets.

Securities (including government and corporate bonds), the largest component, recorded $377.96 billion, a slight decrease of $460 million month-over-month.
Special Drawing Rights (SDR) held with the International Monetary Fund (IMF) also saw a marginal reduction, falling by $70 million to $15.71 billion.
This reduction was more than offset by a substantial increase in Deposits, which ballooned by $7.4 billion to $25.94 billion. This sharp rise in deposits—foreign currency held in financial institutions—is a key factor behind the overall monthly gain.
Gold reserves, which are marked at their purchase price and not adjusted for current market fluctuations, remained unchanged at $4.79 billion.
The stability and growth of foreign reserves are critical indicators of a country's economic health and its ability to withstand external financial shocks, manage its foreign debt, and intervene in the foreign exchange market to stabilize its currency. The current rebound signals growing confidence in South Korea’s financial management and a strengthening external financial position.

Global Standing Elevated 

South Korea's foreign reserve holdings, based on the September-end data used for comparison, have officially climbed back to 9th place globally. This marks an improvement in global standing, reinforcing the nation's position among the world's major economies.

The global ranking is currently dominated by a handful of economic powerhouses:

The continued accumulation of reserves is viewed favorably by international credit rating agencies and investors, providing an extra layer of protection against global economic volatility and contributing to the overall stability of the South Korean financial system. As the nation navigates a complex global economic landscape marked by inflation and geopolitical tensions, the strengthening foreign reserve position serves as a powerful economic bulwark.