Bank of Korea data show foreign-exchange reserves climbed $14.33 billion in
August to $442.28 billion from $427.95 billion at end-July, the largest monthly
increase on record. The central bank said the gain was mainly driven by a surge
in commercial banks’ foreign-currency deposits with the Bank of Korea and
valuation and investment gains as a weaker US dollar lifted foreign-currency
assets. The reserve improvement bolsters South Korea’s external liquidity buffer
after the won weakened several times in 1H — at one point its weakest since 2009
— prompting authorities to warn about excessive FX volatility and seek to curb
retail-driven capital outflows from overseas asset purchases.
