South Korean corporate dollar deposits hit record high as won weakens
Quick Look
Corporate dollar deposits at South Korea's five major banks reached a record $76.98 billion as the won weakened to its lowest level in nearly two years, driven by export proceeds and delayed currency conversion by exporters and importers.
AI-generated summary
Why It Matters
The won-dollar exchange rate data tracks corporate foreign currency holdings at major South Korean banks, with records compiled since May 2021. The won had strengthened earlier in the year before weakening in recent months.
Corporate dollar deposits at major South Korean banks have risen to a record high this month, as the won-dollar exchange rate fell to its lowest level in almost two years, industry data showed Sunday.
The outstanding dollar deposits at five major local banks stood at $76.98 billion as of Thursday, the highest level since banks began compiling such data in May 2021.
The five banks are KB Kookmin, Shinhan, Hana, Woori and NH NongHyup.
The Korean won was quoted at 1,345 won per dollar as of 10:30 p.m. Friday, the highest level since Oct. 8, 2024, when the won traded at 1,344.6 won against the greenback.
The won-dollar exchange rate has risen by 254.2 won from an all-time low of 1,588.2 won per dollar recorded on July 1.
"Dollar deposits are growing as export proceeds come in, while exporters delay exchanging them to the Korean won. Import companies are also actively buying the US dollar in installments," Baek Seok-hyun, an economist at Shinhan Bank's S&T Center, said.
Demand to exchange the won into the dollar is also growing.
A total of $60 million was exchanged from the Korean won to the US dollar in the first three days of this month at the five banks.
The monthly exchanged amount had sharply declined from $275 million in February to $164 million in June before rebounding to $349 million the following month, the data showed.
"Individuals are buying dollars since the won-dollar exchange rate fell in July and August. Demand for the dollar to invest in US stocks has also risen," an official from NH NongHyup bank said. (Yonhap)
What to Watch
AI outlook — possibilities, not facts
Dollar deposits may continue to rise if the won remains weak or depreciates further
Likely · Within weeks
The Bank of Korea may monitor or intervene in forex markets if won depreciation threatens inflation or financial stability
Possible · Within months
Open Questions
- How long will the current trend of rising dollar deposits continue?
- What specific export sectors are driving the increase in dollar proceeds?
- Will the Bank of Korea intervene to stabilize the won if depreciation accelerates?
