South Korea's foreign exchange reserves dropped to a five-year low in April, figures showed, as authorities announced that they will implement 24-hour monitoring of financial and foreign exchange markets to guard against excess volatility.

The country's foreign exchange reserves reached $404.67 billion at the end of April, down nearly $5 billion from the $409.66 billion of the previous month, according to figures released by the Bank of Korea, or BOK, on Thursday. It marked the lowest level for the foreign exchange reserves since April 2020.

The central bank attributed the sharp reduction to foreign exchange swap transactions with the National Pension Service, or NPS, the country's public pension fund manager.

In December, in an effort to stabilize the market during heightened volatility, the NPS was allowed to borrow up to $65 billion, up from the previous cap of $50 billion, from the BOK's foreign exchange reserves for overseas investment under a deal that lasts until the end of this year.

"During swap periods, foreign exchange reserves decrease by the transaction amount but the decrease is only temporary since the funds will be restored upon maturity," the BOK said in a news release.

A decrease in foreign currency deposits at financial institutions was another reason behind the drop, the BOK said, adding that South Korea's foreign reserve holdings ranked the 10th largest in the world at the end of March.

Amid global geopolitical tensions and trade uncertainties, South Korea is facing various challenges in its economy.

In early April, the South Korean won, which has been weakening following a martial law imposition fiasco of former president Yoon Suk-yeol, plummeted to its weakest level against the US dollar in 16 years.

At a meeting on macroeconomic and financial affairs on Thursday, Kim Beom-seok, acting minister of economy and finance, said the ministry will closely monitor the financial and foreign exchange market and make every effort to stabilize the economy, according to Yonhap News Agency.

The meeting was held a day after the United States Federal Reserve announced it will keep its key interest rates unchanged in the 4.25-4.5 percent range.

"Though the stock and bond markets have been generally stable recently, external uncertainties remain due to concerns over US economic slowdown and tariff negotiations," participants were quoted as saying.

Kim said the meeting will be held every week to swiftly respond to market changes.

In a separate meeting, Kim said the government will execute 70 percent of a recently passed extra budget, or 12 trillion won ($8.58 billion), by the end of July to boost domestic demand and support export companies.

"Our economy is facing greater uncertainty than ever," Kim said.

Earlier this week, BOK Governor Rhee Chang-yong said volatility in the foreign exchange market is expected to continue in the near term due to global economic uncertainties and domestic political instability.

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