As of the end of August, Korea's foreign exchange reserves stood at $442.28 billion, up $14.33 billion from the previous month, marking the largest increase on record, the Bank of Korea said on the 3rd. After the Bank of Korea paid interest to financial firms that deposited foreign currency above the statutory ratio, more firms began placing dollars with the central bank. More financial firms are choosing to place foreign currency with the Bank of Korea for safer management rather than investing in risky assets.
Since January, the Bank of Korea has paid annual interest of 3.5% to 3.75% on funds exceeding required reserves that financial institutions must hold. The measure was initially set to run through June, but with the high exchange rate persisting, the period was extended through the end of this year.
According to the "foreign exchange reserves at the end of August" released by the Bank of Korea that day, securities such as stocks and bonds amounted to $387.07 billion, accounting for 87.5% of the total. Compared with the previous month, they increased by $7.07 billion. Deposits, a cash-like asset, were tallied at $30.3 billion, up $7.17 billion over the same period.
International Monetary Fund special drawing rights (SDR) rose by $60 million to $15.77 billion, and the IMF position increased by $30 million to $4.34 billion. The IMF position refers to IMF-related claims held through paid-in investment by IMF member countries. Gold remained at $4.79 billion.
Meanwhile, the Bank of Korea said it will stop publishing the monthly global ranking of foreign exchange reserves. A Bank of Korea official said, "The ups and downs of the foreign exchange reserves ranking have nothing to do with actual external soundness, but the ranking has been given excessive meaning," adding, "It is absolutely not the case that we will withhold disclosure in anticipation of a future drop in the ranking." The official added, "The foreign exchange reserves ranking has so far been provided merely for reference."