Japan's foreign currency deposits surge due to expectations of continued weakening of the yen

(Tokyo = Yonhap News) Reporter Lee Do-yeon = The Nihon Keizai Shimbun (Nikkei) reported on the 21st that Japanese individuals and companies are rapidly increasing their foreign currency deposits as the outlook for a weaker yen continues.

According to the Bank of Japan, Japan's central bank, the balance of foreign currency deposits held in banks in Japan amounted to 26.1 trillion yen (227.8 trillion won) in the second quarter of last year (April to June), an 18% increase from the same period last year.

The foreign currency deposit balance, which increased compared to the same period last year, was 3.9772 trillion yen (34.7 trillion won), the largest amount in 28 years since 1998 when foreign currency deposits were fully permitted.

Nikkei explained that foreign currency deposit balances increased significantly, even excluding the impact of inflated deposits converted to yen due to the weak yen and strong dollar.

In particular, the increase in individuals' foreign currency deposit balances was considered unusual.

Among these, the foreign currency deposit balance held by individuals increased by 8% over the same period to 6.7 trillion yen (58 trillion won).

It has been common for individuals to purchase undervalued foreign currencies during a period of strong yen, but this time, in a period of historically weak yen, there is a new movement to convert assets into foreign currencies such as dollars.

Investment in overseas securities, including not only deposits but also stocks held by households, increased 23% from a year ago to 46.4618 trillion yen as of the end of March.

The foreign currency deposit balance held by companies in the second quarter of this year was approximately 19.3 trillion yen (168 trillion won), a 22% increase from the same period last year.

Regarding this, Tsuyoshi Ueno, chief economist at Nissei Basic Research Institute, explained, "There is a strong expectation that the yen will continue to weaken, so export companies are holding off on exchanging the dollars they earn into yen."