South Korea's Foreign Currency Deposits Rise for Second Month in May
Quick Look
Foreign currency deposits in South Korea increased for the second consecutive month in May, reaching US$112.25 billion, primarily driven by a rise in U.S. dollar savings by residents, according to Bank of Korea data.
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Why It Matters
Foreign currency deposits in South Korea had been declining for three months before rising in April and May, indicating a recent shift in resident savings behavior.
SEOUL, June 26 (Yonhap) -- Foreign currency deposits in South Korea rose for the second consecutive month in May on increased dollar savings, central bank data showed Friday.
Outstanding foreign currency-denominated deposits held by residents stood at US$112.25 billion at the end of May, up $1.57 billion from a month earlier, accordingn to data from the Bank of Korea (BOK).
The figure rose by $8.51 billion in April, snapping a three-month decline.
Residents include South Korean citizens, foreigners who have lived in the country for more than six months and foreign companies. The data excludes interbank deposits.
By currency, U.S. dollar-denominated deposits increased $2.24 billion to $95.56 billion, rising for the second consecutive month.
Euro-denominated deposits dropped $280 million to $6.3 billion, while Japanese yen deposits fell $690 million to $7.52 billion.
Corporate foreign currency deposits rose $2.54 billion to $97.42 billion, while individual holdings declined $960 million to $14.83 billion.
The BOK attributed the increase in dollar deposits to higher basic deposits required for derivatives trading amid stock market volatility, as well as increased dollar receipts by exporting companies.
Open Questions
- What specific impact will this have on South Korea's trade balance?
- What are the long-term trends for non-dollar foreign currency deposits?
- How will future stock market volatility affect these deposit trends?
