Foreign Currency Deposits in July Hit Another Record High: "Securing Dollars Amid Uncertainty"

Bank of Korea 'Resident Foreign Currency Deposit Trends in July'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Amid the economic uncertainty caused by the COVID-19 pandemic, foreign currency deposits held by residents in South Korea have once again reached an all-time high. This is a result of companies and individuals rushing to secure dollars.

According to the "Resident Foreign Currency Deposit Trends for July" released by the Bank of Korea on the 24th, as of the end of last month, the balance of resident foreign currency deposits at foreign exchange banks stood at $87.4 billion, an increase of $2.87 billion compared to the previous month.

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

The foreign currency deposit balance at the end of July ($87.4 billion) is the largest since the statistics were first compiled in June 2012, breaking records for two consecutive months following June ($84.53 billion). Since foreign currency deposit balances were significantly lower before 2012, the balance at the end of July is effectively the highest ever recorded. Resident foreign currency deposits have been on the rise for five consecutive months since February this year (balance of $68.51 billion).

By category, corporate deposits ($69.69 billion) increased by $2.56 billion in one month, and personal deposits ($17.71 billion) also rose by $310 million. The increase in personal foreign currency deposits includes foreign currency deposits related to direct overseas stock investments (direct purchase).

By currency type, dollar deposits ($76.22 billion) and yuan deposits ($1.62 billion) increased by $2.76 billion and $180 million respectively compared to June, while yen deposits ($4.44 billion) decreased by $80 million. Euro deposits ($3.61 billion) showed almost no change.

A Bank of Korea official explained the background of the increase in foreign currency deposits, saying, "In the case of the dollar, the increase was mainly due to securities firms' investor deposits and foreign bond issuance proceeds." He added, "While the increase in foreign currency deposits related to individuals' direct overseas stock investments also had an impact, a larger portion came from corporate deposits and foreign bond issuance proceeds." He further noted, "The increase in yuan deposits was influenced by some companies' export payment deposits."

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