[Asia Economy Reporter Bu Aeri] Last month, the dollar and yen deposit balances at major commercial banks surged sharply.
According to the financial sector on the 10th, as of the end of last month, the dollar deposits at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?recorded approximately 73.9 billion dollars. The dollar deposit balance, which was 59.4 billion dollars at the end of last year, increased by 14.5 billion dollars this year alone.
The dollar deposits rapidly expanded as the won-dollar exchange rate declined, increasing by 7.5 billion dollars compared to October as of the end of last month. Export-import companies, which account for a large portion of the dollar deposit balance, started stockpiling dollars as the exchange rate fell to the 1,300 won level, and individual currency traders (hwan-tech) were also actively moving. The dollar, which reached 1,442.50 won in October, began to decline last month and dropped to the 1,300 won range.
A commercial bank official said, "From the companies' perspective, it seems they kept export proceeds in foreign currency deposits or purchased dollars for payment in preparation for a possible rise in the exchange rate." For individual customers, especially wealthy investors, 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 allow for potential exchange gains.
The yen deposit balance also recorded its highest level this year. As of the end of November, the yen deposit balance 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). The increase in yen deposits, which offer almost no interest, is interpreted as influenced by exchange gains or travel demand.
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