[The Chaotic Hwan-Tech Tribe] Dollar and Yen Deposits Stockpiled... Highest This Year

[Asia Economy Reporter Bu Aeri] It has been revealed that the dollar and yen deposit balances at major commercial banks have reached their highest levels this year. In the case of dollar deposits, the recent decline in the exchange rate has led to a sharp increase, while yen deposits are steadily growing due to increased demand from Japanese travelers who want to purchase yen in advance.

According to the financial sector on the 7th, as of the end of last month, the dollar deposits at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?amounted to approximately 73.9 billion dollars. This marks the first time this year that the balance exceeded 70 billion dollars, increasing by 14.5 billion dollars from 59.4 billion dollars at the end of last year.

Dollar deposits surged particularly last month when the won-dollar exchange rate fell, increasing by 7.5 billion dollars compared to October. This is interpreted as export-import companies, which hold a large share of dollar deposits, stockpiling dollars, and individual currency traders also accumulating dollars as the exchange rate dropped. In October, the dollar reached as high as 1,442.50 won but began to decline last month, falling into the 1,300 won range.

A commercial bank official said, "With the exchange rate returning to the 1,300 won range, export companies tend to keep their export proceeds in foreign currency deposits in preparation for a possible rise in the exchange rate again, and import companies appear to have purchased dollars for payment settlements." Among individual customers, especially VIPs, many diversify their investments into dollar deposits with high interest rates. Dollar deposits at commercial banks (based on a 6-month term) typically offer interest rates in the 5% range and also provide opportunities for exchange gains.

The yen deposit balance also recorded its highest level this year. As of the end of November, the yen deposits at the five major banks totaled 685.1 billion yen. This is an increase of 2.1 billion yen compared to the previous month (683 billion yen) and a rise of 188.4 billion yen compared to the end of last year (496.7 billion yen). Notably, yen deposits have been steadily increasing every month since May. Since yen deposits offer almost no interest, this trend is interpreted as driven by exchange gains or travel demand.

This trend is also reflected in the Bank of Korea’s resident foreign currency deposit trends. As of the end of October, resident foreign currency deposits at foreign exchange banks amounted to 97.65 billion dollars, an increase of 8.15 billion dollars compared to the end of the previous month. In particular, dollar deposits increased by 7.54 billion dollars in one month to 84.8 billion dollars, and yen deposits rose by 430 million dollars to 5.71 billion dollars.