Safe-Haven Asset Fund Flows... Gold, Dollar, and Yen Deposit Balances Significantly Increased

Gold Banking Up 12.7 Billion Won in Ten Days
Growing Interest in Dollar and Yen Currency Investment
Dollar Deposits Increase 6% in One Month
Yen Deposits Up 20% Compared to End of Last Year

[Asia Economy Reporters Yu Je-hoon, Bu Ae-ri] As major asset markets such as stocks and cryptocurrencies are in shock due to rising pressure on benchmark interest rates caused by high inflation rates, idle funds in the market are flowing into so-called "safe-haven assets" like gold (Geum), the US dollar, and the Japanese yen.

According to the financial sector on the 15th, the balance of gold banking (Gold Passbook) at domestic commercial banks (KB Kookmin, Shinhan, Woori) as of the 13th was 625 billion KRW. This represents an increase of about 2% compared to the end of the previous month, rising approximately 12.7 billion KRW in about ten days.

The international gold price peaked at $2,006.35 per troy ounce (1 T.oz = 31.1034768g) in early March due to the impact of the Russia-Ukraine war and has been declining since. As a result, the gold banking balances at commercial banks had been decreasing since February but are recently being reconsidered amid the collapse of asset markets. A commercial bank official stated, "As inflation is expected to persist, wealthy investors are increasingly increasing their gold holdings along with cash."

Along with gold, interest in currency trading (exchange rate + asset management) involving the dollar and yen, which are also considered representative safe-haven assets, is rising. Amid the ongoing strong dollar phenomenon, the dollar deposit balance at the five major commercial banks (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup) reached $56.9 billion as of the 13th, up nearly $3.3 billion (about 6%) in one month.

Idle funds are also flowing into the weakening yen. The yen deposit balance at the five major banks was 598.2 billion yen as of the 13th, an 8% increase compared to last month (553.6 billion yen). Compared to the end of last year, yen deposits have increased by 20% (101.5 billion yen).

Although the Bank of Japan has shown its intention to continue a loose monetary policy despite US interest rate hikes, causing the yen-dollar exchange rate to fall to its lowest level in about 20 years, the excessive decline has led to increased demand expecting a 5-10% exchange gain upon rebound. Foreign currency accounts at commercial banks are also exempt from taxes on exchange gains due to foreign currency appreciation.

Experts believe this preference for safe-haven assets is likely to continue for some time. Kim Hak-soo, team leader at Hana Bank Apgujeong PB Center, said, "The won-dollar exchange rate is above 1,300 won, and the international gold price is expected to rise by about 10-20%. Since the liquidity-driven market phase has ended, the preference for safe-haven assets is expected to persist for the time being."

However, some advise caution when making new investments. Choi Jae-san, PB team leader at Shinhan Bank PWM Yeouido Center, noted, "Gold has room to rise, but since it is also used as an industrial material, it could decline depending on whether a recession occurs." Kim also mentioned, "The current won-dollar exchange rate is at a level that makes new investments burdensome."

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