As Exchange Rate Hits 1200 Won, Dollar Deposits Surge

Foreign Currency Deposits at 4 Major Commercial Banks Total $55.273 Billion
Increase of $3.186 Billion Since End of January

Safe-Haven Demand Grows as Exchange Rate Holds in 1200 Won Range

[Asia Economy Reporter Sim Nayoung] Lee Minyoung, a worker in her 40s, increased her asset portfolio by opening a dollar deposit account at her main bank right after the Lunar New Year holiday. It was convenient because she could deposit and withdraw money anytime and could trade in small amounts without burden. Above all, in an uncertain economic outlook, it was hard to find a safer asset than the dollar. Since the U.S. continues to signal interest rate hikes, she believed the dollar price would rise for the time being. Lee said, "After losing more than 10 million won in the sharp drop at the beginning of the year, I became interested in safe assets," adding, "The interest rate is low at about 1%, but I chose it because I could enjoy small foreign exchange gains."

Interest in dollar deposits is rising as the won-dollar exchange rate climbs to around 1,200 won and asset markets shake. According to the four major commercial banks as of February 4, the balance of foreign currency deposits was $55.273 billion. This is an increase of $3.186 billion from $52.087 billion at the end of January, just before the Lunar New Year holiday. It is also $9.0049 billion higher than at the end of January last year.

Foreign currency deposits have gained momentum since the won-dollar exchange rate soared. The closing price surpassed the 1,200 won mark for the first time in a year and a half on January 6 (1,200.90 won). After a brief decline, it has shown a strong trend above 1,200 won since January 27. On February 7, it closed at 1,200.70 won. Hana Financial Research Institute forecasted, "Reflecting the Federal Reserve's monetary policy normalization, downside risks to the Chinese economy, and geopolitical risks, the won-dollar exchange rate will slightly rise to around 1,210 won by the end of February."

Among experts, there is also a view that the dollar's strength may end earlier than expected. The won-dollar exchange rate may fluctuate around 1,200 won in the first quarter and then decline from the second quarter. Samsung Securities stated in a report, "The dollar value, which rose more than 9% since the second half of last year, may weaken earlier than our initial forecast of the second half." Shinhan Financial Investment predicted, "Although the dollar outlook remains strong in the big cycle, during the economic and market cycle in the first half, currencies of countries other than the U.S. will strengthen, causing periodic dollar weakness."

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