South Korea’s foreign exchange reserves increased for a second straight month, propelling the nation back into the global top 10 for the first time in five months. The rebound allowed it to leapfrog Italy, France, and Singapore, which had pushed it out of the top tier since February.

According to data released by the Bank of Korea on the 5th, the country’s foreign reserves stood at $427.95 billion (approximately 611.8 trillion won) at the end of July, up $590 million from the previous month. This marks the second consecutive month of growth following June’s increase.

A Bank of Korea official attributed the rise to “the new issuance of foreign currency-denominated Foreign Exchange Stabilization Fund Bonds, investment returns, and an increase in the U.S. dollar conversion value of foreign currency assets in other currencies, despite the impact of the foreign exchange swap with the National Pension Service.” The South Korean government issued €1.7 billion worth of euro-denominated stabilization bonds on the 8th of last month.

South Korea’s foreign reserves have fluctuated this year due to exchange rate volatility and market stabilization measures by foreign exchange authorities. After declining for two consecutive months from December last year to January, reserves rebounded in February, only to plummet by nearly $4 billion in March. Following another rebound in April and a subsequent drop in May, the reserves have shown signs of stabilizing since June.

By asset type, holdings of marketable securities, including government and corporate bonds, fell by $340 million to $380.01 billion, declining for a third straight month. In contrast, deposits increased by $860 million to $23.13 billion, extending their gains to three months. The International Monetary Fund (IMF) Special Drawing Rights (SDR) rose by $60 million to $15.7 billion, while gold holdings remained unchanged at $4.79 billion.

The Bank of Korea recently decided to resume purchasing spot gold designated for domestic export for the first time in 13 years, a move expected to alter the size of its gold holdings in the future.

As of the end of June, South Korea’s foreign reserves ranked 10th globally, jumping three spots from the previous month. After holding the 10th position in January, South Korea was overtaken by Italy and France in February, falling out of the top 10 for the first time since the Bank of Korea began compiling the ranking in 2000. By May, it had also been surpassed by Singapore, tumbling to 13th place. However, within five months, it reclaimed the 10th spot, surpassing all three nations.

Among major economies, China maintained its top position with $3.4163 trillion in reserves, followed by Japan ($1.2875 trillion), Switzerland ($1.0877 trillion), Russia ($720.4 billion), India ($668.6 billion), Taiwan ($597.2 billion), Germany ($536.3 billion), Saudi Arabia ($493.9 billion), and Hong Kong ($445.9 billion).

The countries displaced by South Korea saw significant declines in their foreign reserves. Singapore’s reserves fell by $3.9 billion, placing it 11th, while Italy’s dropped by $39.6 billion to 12th place. France’s reserves are also estimated to have decreased by more than $29 billion.

Among major economies, Switzerland saw its reserves increase by $10.9 billion, while China’s fell by $26 billion and Japan’s by $18.4 billion.

Meanwhile, the Bank of Korea has been actively intervening to stabilize the foreign exchange market since the second half of last year in response to a sharp rise in the won-dollar exchange rate. It supplied a record $22.4 billion to the market in the fourth quarter of last year and an additional $13.6 billion in the first quarter of this year. While its foreign exchange swap transaction with the National Pension Service has helped ease upward pressure on the exchange rate by reducing dollar demand in the market, it also temporarily acts as a factor in reducing foreign reserves.