Korea's Forex Reserves Rise Modestly on Bond Sale and Weaker Dollar

South Korea's foreign exchange reserves saw a modest increase in July, despite a record euro-denominated sovereign bond sale and a weaker US dollar. According to the Bank of Korea, the country's reserves rose by $590 million from June to $427.95 billion at the end of July.

The gains from the government's foreign exchange stabilization bond issuance were largely offset by foreign exchange swaps with the National Pension Service and other market operations. The US dollar lost over 8 percent against the Korean won in July, steeper than its fall in the dollar index.

The finance ministry raised $1.94 billion through dual-tranche foreign exchange stabilization bonds on July 8, marking the country's largest-ever euro-denominated issuance. The sale consisted of 700 million euros of three-year notes and 1 billion euros of seven-year notes, priced at 10 basis points and 28 basis points above the euro mid-swap rate, respectively.