The Bank of Korea (BOK) recorded nearly 17 trillion won (approximately $12.5 billion) in returns from foreign assets in 2025, driven by a weaker won and a broad rally in global stock markets, according to data submitted to a lawmaker from the main opposition People Power Party (PPP). The figure represents a 32 percent jump compared to the previous year, marking one of the central bank's strongest performances on foreign holdings in recent memory.

What drove the surge

The BOK attributed the strong showing to two primary factors: the won's depreciation against the US dollar, which inflated the won-denominated value of foreign holdings, and a sustained rally across global equity markets. 'The won's weakness against the dollar and a rally in stock markets drove up net income linked to foreign assets,' the central bank stated in its 2025 annual report, released in March. Returns on foreign assets included won-denominated income from securities holdings, interest on bank deposits, dividends, and proceeds from stock sales.

A decade of volatile returns

The trajectory of the BOK's foreign asset returns over the past decade underscores how sensitive they are to global macro conditions. Returns hovered around 8 trillion won annually between 2016 and 2018, before rising to 13.8 trillion won in 2021 on the back of pandemic-era market tailwinds. They then collapsed to just 3.9 trillion won in 2022, as global markets sold off sharply amid aggressive rate hikes by the US Federal Reserve. A partial recovery followed, with returns rebounding to 4.9 trillion won in 2023 and surging to 12.8 trillion won in 2024, setting the stage for the 2025 peak.

Seoul stocks under pressure

Against this backdrop, South Korean equities have faced fresh headwinds. During the latest trading session, the benchmark Korea Composite Stock Price Index (KOSPI) closed down 177.97 points, or 2.62 percent, at 6,625.93, extending losses for a third consecutive session. The index had opened 0.07 percent higher before turning lower as the session progressed.

The sell-off was broad-based: institutions offloaded a net 1.67 trillion won ($1.24 billion) worth of shares, while foreign investors sold a net 1.99 trillion won. Individual investors bucked the trend, buying a net 2.9 billion won. The decline echoed overnight losses on Wall Street, where the Dow Jones Industrial Average fell 0.66 percent and the Nasdaq Composite declined 0.22 percent.

Inflation and rate concerns weigh on sentiment

Elevated oil prices have emerged as the central concern for markets, stoking fresh inflation worries across Asia. Investors are reportedly wary that higher energy costs could complicate monetary policy, particularly as the US Federal Reserve has signalled it may need to raise interest rates further this year to bring inflation under control. The Korean won, however, rose against the US dollar in the latest session — a divergence from the trend that had boosted the BOK's foreign asset returns through the year.

The interplay between currency movements, global rate policy, and equity performance will likely continue to shape the BOK's returns trajectory — and South Korea's broader financial stability outlook — in the months ahead.