Foreign Currency Deposits Decrease by $6.5 Billion in February Due to COVID-19 Induced Exchange Rate Rise

[Asia Economy Reporter Kim Eun-byeol] Last month, due to the impact of the novel coronavirus infection (COVID-19), the won-dollar exchange rate rose, resulting in a decrease of approximately 6.5 billion dollars in foreign currency deposit balances.

According to the 'Resident Foreign Currency Deposit Trends in February 2020' released by the Bank of Korea on the 18th, as of the end of last month, resident foreign currency deposits at foreign exchange banks were recorded at 68.51 billion dollars. This is a decrease of 6.47 billion dollars compared to January (74.98 billion dollars), marking a decline for two consecutive months.

Resident foreign currency deposits include domestic foreign currency deposits held by nationals, domestic companies, foreigners residing in Korea for more than six months, and foreign companies operating domestically.

The decrease in foreign currency deposits was influenced by the rise in the exchange rate last month. Due to the spread of COVID-19, the won-dollar exchange rate at the end of February was 1,213.7 won, up from 1,191.8 won at the end of January.

In particular, corporate foreign currency deposits (52.84 billion dollars) decreased by 4.81 billion dollars compared to January. Individual deposits recorded 15.67 billion dollars, down by 1.66 billion dollars. Among foreign currency deposits, corporate deposits accounted for 77.1%, and individual deposits accounted for 22.9%.

A Bank of Korea official explained, "As the exchange rate rose, general companies and individuals sold spot foreign exchange, and some companies withdrew deposits for overseas investments, leading to a decrease in foreign currency deposits."

This content was produced with the assistance of AI translation services.