https://www.chosun.com/english/market-money-en/2025/03/07/DWCGME35FZFQ7GRP5FVRN4YVD4/
South Korea’s forex reserves drop to five year low
South Koreas forex reserves drop to five year low Foreign exchange reserves stood at $409.21 billion in February
www.chosun.com
South Korea’s foreign exchange reserves dropped to the lowest level in nearly five years in February as authorities intervened to stabilize the Korean won against the strong U.S. dollar.
The country’s forex reserves stood at $409.21 billion as of the end of February, down $1.8 billion from January, according to the Bank of Korea on Mar. 6. Forex reserves fell to the lowest level in four years and nine months since May 2020, when they were at $407.31 billion. The reserves declined for two straight months, previously falling $4.6 billion in January, adding up to $6.4 billion for the first two months of this year.
The central bank pointed to an increase in the forex swap line with the national pension fund as the main reason for the decline. The forex swap deal allows the state-run National Pension Service (NPS) to borrow U.S. dollars from the BOK’s forex reserves in exchange for the Korean won. When the pension fund obtains dollars through the central bank, demand for dollars in the foreign exchange market falls, which in turn helps curb the value of the won from depreciating further. The BOK emphasized that the reserve decrease is temporary, as the swapped dollars will be returned upon maturity.
When the value of the won plummeted, and the won-dollar exchange rate breached the 1,400 won mark in December after the martial law incident, the central bank raised the foreign exchange swap limit with the NPS from $50 billion to $65 billion.
The won-dollar exchange rate, based on the 3:30 p.m. day market close, climbed to 1,472.5 won at the end of last year. The rate stabilized within the 1,450-1,460 won range in January but briefly fell to 1,427.4 won on Feb. 24 following forex intervention. Recently, it shot up to around 1,440 won due to concerns over U.S. tariff policies and fears of a global trade war.
The appropriate size of forex reserves has been a subject of ongoing debate. Since forex reserves act as a cushion or safety barrier in case of a market shock, $400 billion is generally considered the minimal amount required for Korea. The current reserves remain above that level.
BOK Governor Rhee Chang-yong dismissed concerns that forex reserves had declined drastically after the won depreciated sharply following the martial law declaration. When the International Monetary Fund noted that Korea’s forex reserve adequacy index fell short of recommended levels, Rhee stressed that the assessments were only one factor in evaluating the country’s financial stability. “Korea holds the ninth-largest forex reserves in the world, so the IMF standard may not fully apply to our situation,” he said.
Despite the central bank’s reassurances, some experts remain cautious. Given South Korea’s sensitivity to foreign exchange crises—notably the 1997 Asian Financial Crisis—even a small decline in reserves raises concerns. Forex reserves serve as a buffer against balance of payments imbalances and volatility in foreign exchange markets.
“According to Bank for International Settlements guidelines, Korea should have approximately $920 billion in forex reserves, but the current level is less than half of that,” said Kim Dae-jong, a professor at Sejong University. He also noted that Korea’s forex reserves account for only 23% of GDP, lower than Taiwan’s 74% and Hong Kong’s 114%, which have similar economic structures.
South Korea's forex reserves drop to five-year low
한국의 외환보유액, 5년 만에 최저 수준으로 감소
"drop to" → (수치가) ~까지 떨어지다
한국의 외환보유액이 5년 만에 최저 수준으로 감소했다.
South Korea's foreign exchange reserves have hit their lowest level in five years.
South Korea’s foreign exchange reserves dropped to the lowest level in nearly five years in February as authorities intervened to stabilize the Korean won against the strong U.S. dollar.
한국의 외환보유액이 2월에 거의 5년 만에 최저 수준으로 떨어졌다. 이는 당국이 강달러에 맞서 원화를 안정시키기 위해 개입한 영향이다.
"drop to" → (수치가) ~까지 떨어지다 / "intervene to" → ~하기 위해 개입하다
한국의 외환보유액이 2월에 거의 5년 만에 최저 수준으로 감소했으며, 이는 당국이 강한 미국 달러에 맞서 원화를 안정시키기 위해 개입한 결과다.
In February, South Korea’s forex reserves fell to their lowest level in nearly five years due to government intervention to stabilize the Korean won against a strong U.S. dollar.
The country’s forex reserves stood at $409.21 billion as of the end of February, down $1.8 billion from January, according to the Bank of Korea on Mar. 6.
한국은행에 따르면, 2월 말 기준 한국의 외환보유액은 4,092억 1천만 달러로, 1월보다 18억 달러 감소했다.
"stand at" → (수치가) ~에 이르다
한국은행에 따르면, 2월 말 기준 외환보유액은 4,092억 1천만 달러로 1월 대비 18억 달러 감소했다.
As of late February, South Korea’s forex reserves totaled $409.21 billion, reflecting a $1.8 billion decline from January, according to the Bank of Korea.
Forex reserves fell to the lowest level in four years and nine months since May 2020, when they were at $407.31 billion.
외환보유액은 2020년 5월(4,073억 1천만 달러) 이후 4년 9개월 만에 최저 수준으로 떨어졌다.
"fall to" → (수치가) ~까지 하락하다
외환보유액은 2020년 5월 이후 4년 9개월 만에 최저 수준인 4,092억 1천만 달러로 떨어졌다.
Forex reserves dropped to their lowest level in four years and nine months, reaching $409.21 billion—the lowest since May 2020.
** Forex(FX)는 Foreign Exchange의 약자로, 외환거래나 국제외환시장을 의미합니다.
The reserves declined for two straight months, previously falling $4.6 billion in January, adding up to $6.4 billion for the first two months of this year.
외환보유액은 두 달 연속 감소했으며, 1월에 46억 달러 줄어든 데 이어 올해 첫 두 달간 총 64억 달러가 감소했다.
"add up to" → 총합이 ~에 이르다
외환보유액은 두 달 연속 감소했으며, 1월에 46억 달러 줄어든 데 이어 올해 첫 두 달 동안 총 64억 달러가 감소했다.
The reserves have declined for two consecutive months, with a $4.6 billion drop in January, totaling $6.4 billion in losses for the first two months of 2024.
The central bank pointed to an increase in the forex swap line with the national pension fund as the main reason for the decline.
중앙은행은 외환보유액 감소의 주요 원인으로 국민연금과의 외환 스와프 확대를 지목했다.
"point to" → ~을 주요 원인으로 지목하다
중앙은행은 국민연금과의 외환 스와프 라인 증가가 외환보유액 감소의 주요 원인이라고 지목했다.
The Bank of Korea attributed the decline in forex reserves primarily to an increased forex swap line with the National Pension Service.
The won-dollar exchange rate, based on the 3:30 p.m. day market close, climbed to 1,472.5 won at the end of last year.
오후 3시 30분 환율 마감 기준, 지난해 말 원-달러 환율은 1,472.5원까지 상승했다.
"climb to" → (수치가) ~까지 오르다
지난해 말 원-달러 환율은 1,472.5원까지 상승했다.
At the end of last year, the won-dollar exchange rate surged to 1,472.5 won at market close.
The appropriate size of forex reserves has been a subject of ongoing debate.
적절한 외환보유액 규모를 두고 지속적인 논쟁이 이어지고 있다.
"be a subject of" → ~의 주제가 되다
적정 외환보유액 규모를 둘러싼 논쟁이 지속되고 있다.
The adequacy of South Korea’s forex reserves remains a topic of ongoing debate.
One-Sentence Summary (한 줄 요약 & 해석)
South Korea’s forex reserves fell to a nearly five-year low in February due to interventions aimed at stabilizing the won, with debates continuing over the adequacy of the reserve level.
한국의 외환보유액은 원화 안정을 위한 개입으로 인해 2월에 거의 5년 만에 최저 수준으로 감소했으며, 적정 외환보유액 수준에 대한 논쟁이 계속되고 있다.
