Strong dollar pressures Korea's FX reserves, down for 2nd month SEOUL, February 04 (AJP) - South Korea’s foreign exchange reserves fell by more than $2 billion in January, extending a decline for a second consecutive month as the won remained weak against the U.S. dollar. The Bank of Korea said Wednesday that reserves stood at $425.91 billion at the end of January, down $2.15 billion from $428.05 billion a month earlier. Holdings of securities, including government and corporate bonds, rose $6.39 billion to $377.52 billion. However, deposits dropped $8.55 billion to $23.32 billion. Special drawing rights allocated by the International Monetary Fund remained unchanged at $15.89 billion, while gold holdings were also steady at $4.79 billion, as they are recorded at purchase price rather than market value. A Bank of Korea official said deposits typically increase at quarter-end or year-end as financial institutions adjust balance sheets to meet regulatory ratios. This time, however, overall deposits declined despite an increase in foreign-currency deposits at financial institutions. The official added that market-stabilization operations, including foreign exchange swaps and reserve requirement management, appeared to have influenced the overall reserve level. South Korea ranked ninth globally in foreign exchange reserves as of the end of December, with holdings of $428.1 billion. China held the largest reserves at $3.36 trillion, followed by Japan with $1.37 trillion and Switzerland with $1.08 trillion. Other countries ahead of South Korea included Russia, India, Taiwan, Germany and Saudi Arabia, according to central bank data. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2026-02-04 08:18:31

Resident FX deposits in Korea jumped nearly $16 bln in December SEOUL, January 26 (AJP) -Foreign-currency deposits at South Korea-based banks surged by nearly $16 billion in December on prolonged weakness in the Korean won, central bank data showed. The Bank of Korea said Monday that resident foreign-currency deposits at local foreign-exchange banks totaled $119.43 billion at the end of December, up $15.88 billion from the previous month. It marked the second consecutive monthly increase. Resident foreign-currency deposits include holdings by South Korean individuals and companies, foreigners who have lived in South Korea for at least six months, and foreign companies operating in the country. By currency, U.S. dollar deposits climbed $8.34 billion to $95.93 billion, while euro deposits rose $6.35 billion to $11.75 billion. Japanese yen deposits increased by $870 million to $9.0 billion. A Bank of Korea official said dollar deposits expanded as funds flowed into banks for multiple purposes, including about $2.0 billion related to foreigners’ purchases of equity stakes in South Korean companies, current-account settlements by exporters and importers, and investor funds held by securities firms. Euro deposits rose as foreign-affiliated companies placed funds tied to current-account payments due early in the year, including proceeds from discounting foreign-currency sales receivables, the official said. Yen deposits increased mainly due to investor deposits at securities firms. By depositor type, corporate foreign-currency deposits jumped $14.07 billion to $102.5 billion, while individual deposits rose $1.82 billion to $16.93 billion. By bank type, deposits at domestic banks increased $12.76 billion to $101.6 billion, while those at local branches of foreign banks rose $3.13 billion to $17.83 billion. 2026-01-26 13:07:57

Roaring stock market lifts Korean consumer confidence despite weak real economy SEOUL, January 23 (AJP)-South Koreans grew more optimistic about the economy and their spending plans in January, buoyed by a surging stock market despite continued weakness in real economic conditions from a weak won and strong prices. According to the Bank of Korea on Friday, the Consumer Sentiment Index rose 1.0 point from the previous month to 110.8 in January, supported by the strongest spending bias in five months. A reading above 100 indicates sentiment more optimistic than the long-term average for the 2003–2024 period, while a reading below 100 signals pessimism. Among the six sub-indicators, the outlook for the overall economy rose 2 points to 98. Current living conditions edged up 1 point to 96, the outlook for consumer spending increased 1 point to 111 - highest in five months, and the assessment of current economic conditions also rose 1 point to 90. The outlook for living conditions remained unchanged at 100, while expectations for household income held steady at 103. Lee Hye-young, head of the BOK’s economic sentiment survey team, attributed the improvement in sentiment largely to the record-setting stock market. The benchmark KOSPI has been flirting with the 5,000 mark after an almost uninterrupted rally over the past month. “Rising stock prices influenced multiple indicators, including living conditions, household savings and the outlook for consumer spending,” Lee said. She added that higher investment income from stocks and funds appeared to improve perceptions of household finances, while some respondents interpreted the market rally itself as a signal of broader economic improvement. Lee noted that the weak won had little impact on sentiment this month, adding that authorities’ efforts to stabilize the dollar toward year-end helped limit concerns. The housing price outlook index, which measures expectations for home prices a year ahead, rose 3 points to 124 — the highest level since October 2021 — as apartment sale prices continued to climb nationwide and across the Seoul metropolitan area. The increase suggests expectations for further gains in home prices have strengthened, Lee said. Expected inflation for the year ahead remained unchanged at 2.6 percent, while perceived inflation over the past year was steady at 2.9 percent 2026-01-23 07:44:02

S. Korea leans on semiconductors as non-IT exports lose ground: BOK SEOUL, January 16 (AJP) - South Korea’s exports remain resilient, but the country is steadily losing ground in global competitiveness in some sectors, according to a report released Friday by the Bank of Korea. While headline export figures have held up, shipments of major non-IT goods — excluding semiconductors — have been largely stagnant for years, deepening performance gaps across industries. South Korea’s share of the global export market has been on a downward trajectory since 2018, as competition intensifies, particularly from China. Export growth since the COVID-19 pandemic has been concentrated in a handful of sectors, most notably semiconductors, while non-IT exports have effectively stalled since the mid-2010s, according to the report. Overall exports are expected to rise this year, supported by strong semiconductor demand. But persistent weakness in non-IT sectors could further widen disparities among products, highlighting structural vulnerabilities in the export base. By sector, the bank said steel and machinery have suffered a broad decline in competitiveness as global demand slows and both product quality and market positioning weaken. Expanded Chinese supply has intensified competition, weighing on South Korea’s presence in key markets such as Southeast Asia. Automakers strengthened competitiveness through brand premiumization and the development of dedicated electric-vehicle platforms, while semiconductor makers maintained a technological edge in high value-added memory chips and benefited from rising demand linked to artificial intelligence. Still, risks are mounting. The bank warned that global automakers are expanding local production in major export markets, potentially eroding South Korea’s market access. In semiconductors, China’s rapid progress could weaken competitiveness in general-purpose, lower-spec memory chips, the BOK said. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2026-01-16 08:45:30

Overseas investing reshaping Korea's FX market: BOK SEOUL, January 14 (AJP) - A sharp rise in overseas securities investment by South Koreans led to nearly $20 billion in net foreign-exchange outflows last year, the Bank of Korea said in a report Wednesday, underscoring why the won weakened despite large current-account surpluses. Net foreign-currency outflows linked to residents’ overseas securities purchases and overseas investment by pension funds totaled $19.6 billion from January through October last year. The findings were presented by Kwon Yong-oh, head of the Bank of Korea’s international finance research team, at a policy symposium in Seoul. Kwon said exchange-rate movements since the global financial crisis have been closely tied to shifts in foreign-exchange supply and demand. Prior to the 2020s, current-account surpluses typically exceeded demand created by residents’ overseas investment, resulting in an excess supply of foreign currency and a stronger won. That dynamic has since changed, he said. Despite sustained current-account surpluses since 2024, the won has weakened rapidly. Kwon suggested that export-related dollar inflows may not be fully entering the market as some exporters delay currency conversion, while growing overseas investment by residents has tightened dollar supply and demand. From January through October last year, South Korea’s current-account surplus generated $89.6 billion in net inflows, while foreign investors’ purchases of domestic securities added $31.9 billion, according to the central bank. Those inflows were more than offset by a surge in residents’ overseas securities investment and overseas investment by the National Pension Service, resulting in a net foreign-exchange outflow of $19.6 billion, or roughly 29 trillion won at current exchange rates. The outflow marked a sharp increase from the same period a year earlier, when net outflows totaled about $500 million. Residents’ overseas securities investment jumped to $117.1 billion from $71.0 billion a year earlier. “Residents’ behavior is driving the shift in foreign-exchange supply and demand,” Kwon said. Kwon also pointed to a widening growth gap between South Korea and the U.S., as well as differences in expected stock-market returns, as contributing factors to the won’s recent weakness. Addressing claims that excessive liquidity expansion has weakened the won, Kwon said a long-term channel linking money-supply growth to higher inflation and currency depreciation is theoretically possible, but noted that empirical evidence remains inconclusive. 2026-01-14 16:19:56

Foreign investors extend buying streak in South Korean stocks, bonds SEOUL, January 14 (AJP) - Foreign investors were net buyers of South Korean stocks and bonds in December, extending net inflows to a fourth consecutive month. Net foreign inflows into South Korean securities totaled $7.44 billion in December, according to the Bank of Korea’s report on international finance and foreign-exchange market trends released Wednesday. The figure marked the largest monthly inflow since September, when inflows reached $9.12 billion. Bond purchases accounted for the bulk of the inflows, totaling $6.26 billion, while net stock buying came to $1.19 billion. Bond inflows had surged to $11.81 billion in November, the highest monthly figure since the data series began in 2008. In December, foreign holdings of South Korean bonds that matured during the month reached $6.49 billion, the largest amount recorded for any December, the central bank said. A BOK official said equity flows turned positive on expectations that rising memory chip prices would lift profitability at domestic semiconductor companies. Bond inflows, meanwhile, continued to be led by public-sector investors, even as sizable volumes of bonds matured. South Korea’s credit default swap premium on government bonds averaged 22 basis points in December, down from 23 basis points a month earlier, indicating slightly improved perceptions of sovereign risk. 2026-01-14 13:43:50

South Korean business sentiment improves for second month, but services outlook slips SEOUL, December 30 (AJP) - South Korean companies reported improved business conditions for a second consecutive month in December, supported by year-end seasonal factors, the central bank said on Tuesday. However, sentiment for the coming month weakened sharply in the nonmanufacturing sector as the seasonal boost is expected to fade. According to the Bank of Korea’s December business survey and Economic Sentiment Index, the all-industry Corporate Business Sentiment Index (CBSI) rose 1.6 points from November to 93.7, extending gains recorded the previous month. The CBSI, which combines key Business Survey Index components for manufacturing and nonmanufacturing, remains below its long-term average of 100, indicating continued overall pessimism despite the recent improvement. Manufacturing sentiment improved, with the CBSI rising 1.7 points to 94.4, supported by better funding conditions and higher production. The nonmanufacturing index climbed 1.4 points to 93.2, driven by stronger sales and improved financing conditions. The central bank said year-end seasonal effects provided a lift to nonmanufacturing activity, while manufacturing benefited from improved conditions in industries linked to U.S. capital spending. Lee Hye-young, head of the Bank of Korea’s economic sentiment survey team, said sectors such as metal processing and machinery and equipment were positively affected by U.S. investment trends. She noted that these industries include a large number of small and medium-sized firms. On currency movements, Lee said the weak won likely boosted profitability for manufacturing exporters, while companies with a high reliance on imports faced pressure on margins. The exchange rate had a more limited impact on nonmanufacturing overall, though some sectors, including wholesale, retail and trade-related industries, were affected, she added. The all-industry CBSI outlook for next month fell 1.7 points to 89.4. Manufacturing expectations rose 1.9 points to 93.6, while nonmanufacturing sentiment dropped sharply by 4.1 points to 86.6, marking the largest monthly decline since January. Lee said manufacturing expectations remained supported by industries that improved this month, while nonmanufacturing sentiment weakened as sectors that benefited from temporary year-end demand anticipated a slowdown in early 2026. The Economic Sentiment Index fell 1.0 point to 93.1, while its cyclical component increased by 0.7 point, the central bank said. 2025-12-30 10:05:16

Bank of Korea takes rare moves to boost USD liquidity and defend won SEOUL, December 19 (AJP) -The Bank of Korea (BOK) on Friday moved to shore up foreign-exchange market liquidity to help stabilize the won, announcing temporary regulatory relief and incentives for financial institutions in desperate move to buttress the local currency without direct intervention. At an emergency meeting held Friday, the central bank’s Monetary Policy Board approved a six-month package of measures to be applied from January through June next year. The steps follow a joint government–BOK announcement a day earlier outlining a “flexible adjustment plan” for the foreign-exchange stability framework. Under the measures, the BOK will for the first time pay interest on excess foreign-currency reserve deposits held by financial institutions in hopes to keep their dollar holdings at home. Previously, banks earned no return on such deposits, but they will now receive interest benchmarked to the U.S. Federal Reserve’s target policy rate range of 3.50 to 3.75 percent. The board also decided to fully waive the foreign-exchange stability levy over the same period. The levy, imposed on non-deposit foreign-currency liabilities under the Foreign Exchange Transactions Act, was introduced to curb excessive foreign-currency borrowing. The waiver is expected to reduce banks’ dollar funding costs and encourage a greater supply of foreign currency to the market. Yoon Kyung-soo, director general of the BOK’s International Department, said the levy waiver alone would lower financial institutions’ foreign-currency funding costs by about 10 basis points. He added that paying interest on foreign-currency reserves would strengthen banks’ liquidity buffers while also supporting profitability. The BOK said the measures would reinforce exchange-rate stabilization efforts alongside regulatory easing announced by the government, which included postponing foreign-currency liquidity stress tests and raising the cap on foreign banks’ forward foreign-exchange positions from 75 percent to 200 percent. Yoon said the central bank convened the emergency monetary policy meeting after judging that recent exchange-rate movements reflected a severe imbalance between supply and demand, but stressed that “this is not a situation comparable to last year’s martial law-related crisis.” He noted that foreign-currency funds previously managed overseas would effectively remain in South Korea if deposited at the BOK, easing pressure on the market. He also said any early-January inflows of excess reserve deposits would be manageable, as foreign-exchange reserves are calculated at month-end. Potential increases in currency-hedging demand from the National Pension Service, he added, were unlikely to pose a major risk, though adjustments could take time. Earlier this week, the central bank has extended $65 billion currency swap arrangement with the NPS. The move marks the first emergency Monetary Policy Board meeting since December 4 last year, immediately after the declaration of martial law. * This article, published by Aju Business Daily, was translated by AI and edited by AJP. 2025-12-19 16:39:25

Korea's M2 growth quickens to 8.7% in Oct; BOK rejects FX link SEOUL, December 16 (AJP) -South Korea’s broad money supply (M2) has remained in the 8-percent growth range since August and accelerated further to 8.7 percent in October, the Bank of Korea said Tuesday, while pushing back against claims that the liquidity increase is driving the won’s weakness. According to the central bank’s monetary aggregates report, the average M2 balance stood at 4,471.6 trillion won in October, up 0.9 percent from the previous month and 8.7 percent from a year earlier, marking the third consecutive month of annual growth above 8 percent. M2 includes cash, demand deposits and short-term financial instruments such as money market funds and certificates of deposit. The October increase was driven mainly by a 31.5 trillion won rise in securities-related balances, reflecting heavy stock market investment amid a rally in domestic equities. Regular deposits increased by 9.4 trillion won, partly due to banks’ regulatory funding needs. By sector, households and nonprofit organizations recorded a 24.1 trillion won increase in M2 balances, while other financial institutions and corporations also contributed to the expansion. Narrow money supply (M1), which includes only cash and demand deposits, rose 0.2 percent month on month and 8.1 percent year on year. Amid growing debate over whether rapid M2 growth is fueling asset inflation and foreign-exchange volatility, the Bank of Korea said it would revise its monetary statistics in line with updated International Monetary Fund (IMF) guidelines, with revised figures scheduled for release on Dec. 30. From November data onward, the central bank will publish two versions of M2—the current series and a measure excluding securities-related balances—for at least a year, in an effort to clarify underlying liquidity conditions. Kim Min-soo, head of the BOK’s financial statistics team, said securities accounted for 3.3 percentage points of October’s 8.7 percent M2 growth, or about 40 percent of the total increase. “Without securities, the growth rate would have been below 6 percent in September,” he said. The central bank stressed that liquidity alone is not driving housing prices or the exchange rate. Park Sung-jin, head of the BOK’s market operations team, noted that South Korea’s M2 definition differs from that of the United States, where securities are excluded, cautioning against direct comparisons of liquidity conditions across countries. He added that recent housing price increases in the Seoul metropolitan area cannot be attributed solely to money supply growth, pointing to macroprudential measures that have slowed household lending. As for the won, Park said exchange-rate movements are being shaped more by overseas securities investment, exporters’ foreign-currency holdings, and broader capital flows than by domestic liquidity expansion. As of 2:40 p.m. Tuesday, the dollar reversed direction after falling to 1,468 won earlier to 1,475.60 won, up 4.80 won last close on heavy foreign stock selling. 2025-12-16 14:48:02

Weaker won sends Korea's import prices up to a 19-mo high SEOUL, December 12 (AJP) -South Korea’s import prices climbed in November despite a sharp pullback in global fuel costs, as the won’s depreciation against the U.S. dollar outweighed relief from cheaper energy, Bank of Korea data showed Friday. The import price index rose 2.6 percent on month and 2.2 percent on year to 141.82, accelerating from October’s 138.19 and posting the steepest monthly increase since April last year. The gains came even as Dubai crude averaged $64.47 per barrel in November, down from $65 in October, highlighting the dominant impact of exchange-rate movements on the country’s trade conditions. The dollar averaged 1,457.77 won in November — up 2.4 percent from the previous month and 4.6 percent from a year earlier — amplifying import costs across major categories. Raw materials rose 2.4 percent, led by higher natural gas prices, while intermediate goods such as computers and electronic components climbed 3.3 percent. Capital goods increased 1.5 percent and consumer goods 1.8 percent. Some inputs central to Korea’s industrial base posted sharp jumps. Lithium hydroxide surged 10 percent, and flash memory prices leapt 23.4 percent, reflecting a surge in chip-fabrication activity. Bank of Korea price statistics chief Lee Moon-hee cautioned that volatility remains elevated. “The average exchange rate from December 1 to 10 rose by 0.8 percent from the previous month,” he said. “Given the uncertainty, we need to monitor exchange rate fluctuations until the end of the month.” A weak won, however, proved supportive for exporters. The export price index climbed 3.7 percent on month and 7.0 percent on year to 139.73, boosted by a broad-based jump in semiconductor prices. DRAM led the gains with an 11.6 percent rise amid persistent supply tightness. When measured in U.S. dollars, import prices increased 0.7 percent in value and 4.3 percent in volume, while export prices surged 9.1 percent in value and 6.8 percent in volume, improving overall trade conditions. South Korea’s net terms of trade index rose 5.8 percent on year, marking 29 straight months of improvement. Export prices gained 2.1 percent, far outpacing the 3.4 percent decline in import prices, while the volume-based index jumped 13 percent, signaling strengthened purchasing power for the economy. 2025-12-12 07:53:01