Because it's cheap, first 'Jupjup'... Hwan-tech tribe jumping into the fluctuating exchange rates

In Ten Days, Commercial Banks' Dollar Deposit Balances Soar 15%... Yen Buying Momentum Continues

[Asia Economy Reporter Yoo Je-hoon] Office worker Kim Ki-beom (39) has been closely monitoring the recent decline in the won-dollar exchange rate, carefully considering the timing for buying. He plans to invest in dollars once the won-dollar exchange rate approaches the 1,200 won level. Kim said, "Although the exchange rate has recently fallen, the inflation situation in the U.S. is still unstable, so there is always a possibility it could rise again."

Lee Su-jin (34), who plans to travel abroad to Japan for the first time in three years at the end of this year, purchased 200,000 yen (about 1.89 million won) through a commercial bank on the 9th. This was after the won-yen exchange rate, which had once risen close to 1,000 won per 100 yen, dropped to 934.57 won. She said, "It's not for investment purposes, but I ended up making a profit of several tens of thousands of won."

Recently, the buying trend of dollars and yen among currency tech enthusiasts has become active. This is amid expectations that U.S. inflation may slow down, causing the won-dollar exchange rate to plunge and increasing exchange rate volatility.

According to the financial sector on the 15th, as of the 11th, the dollar deposit balance at the four major commercial banks (KB Kookmin, Shinhan, Hana, and Woori) was $68.943 billion. This is about a 14.7% increase compared to the end of the previous month ($60.092 billion). In just over ten days, the balance increased by nearly $9 billion.

The cause of this increase in dollar deposit balances is attributed to sharp exchange rate volatility. According to the Seoul foreign exchange market, the won-dollar exchange rate reached a yearly high of 1,442.20 won as of the 25th of last month but has continued to decline, falling to 1,325.7 won as of the previous day. This is due to the U.S. October Consumer Price Index (CPI) rising by 7.7%, below the market consensus of 7.9%, raising expectations for inflation easing and a subsequent easing of the U.S. Federal Reserve's tightening policy.

Demand for another safe asset, the yen, is also increasing. The yen deposit balance at the four major commercial banks was 685.867 billion yen, a 4.0% increase compared to the end of the previous month (659.728 billion yen). The won-yen exchange rate, which had risen to the 1,069 won level per 100 yen at the beginning of the year, has generally declined due to aggressive U.S. interest rate hikes and the Bank of Japan's continued accommodative monetary policy. On the 9th, it fell to 934.7 won, attracting currency tech enthusiasts.

An official from a commercial bank explained the recent surge in foreign currency purchases, saying, "The recent sharp decline in the won-dollar and won-yen exchange rates has led to a rush of foreign currency purchases aimed at exchange gains. The rise of foreign currency time deposit interest rates to the 5% range also had an impact." He added, "Additionally, demand from companies seeking to secure foreign currency at relatively low points and overseas study and travel demand following the end of the COVID-19 pandemic are also factors."

As demand concentrates, commercial banks are actively targeting currency tech enthusiasts. Shinhan Bank unified the product names of its five representative foreign currency deposit products as 'Shinhan Value-up' and is conducting a lottery to provide coffee coupons to new customers. It is also running a 'SolSolhan Preferential Interest Rate Event' offering preferential interest rates to customers who subscribe to dollar time deposits through the Shinhan SOL application.

KB Kookmin Bank is running the 'KB TWO Tech Foreign Currency Time Deposit Exchange Rate Preferential 100% Event' for currency tech enthusiasts until December 30. The KB TWO Tech Foreign Currency Time Deposit allows customers to enjoy both exchange gains and interest when the designated target exchange rate is reached upon contract termination. KB Kookmin Bank offers a 100% exchange rate preferential benefit to new customers subscribing to this product. Woori Bank also provides an 80% exchange rate preferential benefit to customers subscribing to 'Overseas Foreign Currency Accumulation Deposit' and 'Woori The Dollar Foreign Currency Accumulation Deposit.'

However, the financial sector advises caution in currency investments due to high volatility. Kim Kang-tae, team leader at KB Kookmin Bank Yangjae PB Center, said, "High-net-worth clients are maintaining a wait-and-see stance due to the significant volatility of the dollar and yen." He added, "With commercial bank time deposit rates at 5% and short-term government and public bond yields also rising to the low 5% range, high-net-worth clients now have a wider range of safe asset options beyond currency."