South Korea’s foreign exchange reserves remain critically low at approximately 20% of GDP, far below global peers and sparking renewed warnings about economic fragility, according to an exclusive Chosun Ilbo report on January 20, 2026. With reserves at $428 billion as of December 2025 down sharply from November—the ratio underscores South Korea’s exposure to currency shocks despite its export powerhouse status and ninth-place global ranking in absolute terms. Moreover, experts highlight this disparity as a key risk factor in an era of won depreciation and geopolitical tensions.
Low Reserves Relative to Economic Size Raise Alarms
Bank of Korea data confirms reserves fell $2.6 billion to $428.05 billion in December 2025, the steepest monthly drop in 28 years, driven by aggressive interventions to stabilize the volatile won. At roughly 20% of GDP (estimated ~$2.1–2.2 trillion for 2025), this level trails major economies significantly. For comparison, Taiwan maintains ~80–90% coverage, Japan 28%, and even emerging peers like India exceed 15–20% with stronger buffers.
The Chosun report notes that over the past 2–3 years, the ratio has lingered in the low 20% range, inadequate for defending against capital outflows or sudden stops in foreign funding. CEIC data shows conflicting lower figures (7% monthly), but annual aggregates align closer to 20–23%, per IMF and BIS metrics, amplifying concerns amid household debt >100% GDP and FX market shallowness.
Interventions Deplete Reserves as Won Weakens
December’s plunge the first in seven months stems from BOK sales to counter won depreciation toward 1,480/USD, a 27-year low. Officials attribute it to stabilizing volatility from US tariffs, political turmoil (Yoon impeachment), and global trade frictions. Reserves cover ~2.6x short-term debt but rank low adequacy-wise per
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