It turns out the foreign exchange authorities sold about $22.467 billion of foreign currency in the foreign exchange market in the fourth quarter of last year (October–December). It is the largest amount since related statistics have been compiled. As the won-dollar exchange rate, which was in the 1,400-won range at the end of the third quarter last year, surged to 1,484 won in the fourth quarter, they appear to have moved to defend the rate.
According to the "net transactions by foreign exchange authorities" released by the Bank of Korea (BOK) on the 31st, the foreign exchange authorities made net sales of $22.467 billion in the foreign exchange market in the fourth quarter of last year to stabilize the market. It is the largest since the BOK began releasing the related data in the third quarter of 2019. Compared with the previous quarter (net sales of $1.745 billion), it expanded by a factor of 12.9.
The net foreign exchange transaction amount is the total amount of foreign currency purchases by the foreign exchange authorities minus the amount of sales. A negative (-) net transaction means the authorities made net sales of foreign currency in the market to ease the upward trend of the won-dollar exchange rate.
Recent quarterly net foreign exchange transaction amounts are ▲ first quarter 2024, -$1.815 billion ▲ second quarter, -$5.796 billion ▲ third quarter, +$192.0 billion ▲ fourth quarter, -$3.755 billion ▲ first quarter 2025, -$2.96 billion ▲ second quarter, -$797 million ▲ third quarter, -$1.745 billion.
Yun Kyung-su, director general of the international department at the Bank of Korea (BOK), said the reason intervention in the foreign exchange market increased was that "relative to the current account surplus in the fourth quarter of last year, the amount of (dollar) funds residents moved in and out was exceptionally large, and in October, residents' overseas securities investment funds widened to about three times the current account, making the won's divergence from other currency the largest."
On the recent exchange rate trend, he said, "We expect funds to start flowing in in earnest from April, when inclusion in the World Government Bond Index (WGBI) begins," adding, "We see a positive impact on Korea in terms of foreign exchange supply and demand."