"Let's Go Buy Yen"... Late-Night Currency Exchange Crowd Flocks to Banks

Early Morning of 23rd, Increase in Yen Exchange Customers on Shinhan Bank App
970 KRW per 100 Yen, but Only Shinhan Bank Offers 950 KRW
'Made Money from Yen Crisis' Posts Circulate
Experts Say "It May Not Be the Bottom, Be Cautious with Investments"

Shinhan Bank's 'SOL' notification screen indicating a temporary shortage of the yen exchange limit. Photo by Reader Provided

[Asia Economy Reporter Song Seung-seop] As the value of the Japanese yen plummets, people seeking arbitrage profits are secretly visiting banks. At some branches, the available yen exchange limits were temporarily depleted. Experts have warned against blindly investing in the highly volatile yen.

According to the financial sector on the 24th, customers flocked to Shinhan Bank’s application ‘SOL’ in the early hours of the previous day to convert Korean won into yen. This was after it became known that the yen was being offered at a cheaper rate than other banks. While other commercial banks were trading yen at around 970 won, Shinhan Bank was trading yen at the 950 won level. Simply exchanging about 9.5 million won would yield an arbitrage profit of over 200,000 won in simple calculations.

The background to this is the ‘overnight market intervention’ by the Japanese government and the Bank of Japan (BOJ). When the yen-dollar exchange rate surpassed the 151.90 yen level for the first time in 32 years, Japanese authorities sold dollars and bought yen in the New York foreign exchange market on the night of the 21st local time. As a result, the yen-dollar exchange rate fell to the mid-144 yen range (yen appreciation). Due to this measure, the yen value in Korea, which had fallen to 950.9 won per 100 yen, surged sharply in a short period, reaching 973.89 won.

When exchange rates change, banks automatically adjust their exchange rates according to their own systems. Such exchange rate postings can occur hundreds of times during weekday business hours. However, during the early morning or weekends when the domestic foreign exchange market is closed, rates are often not changed unless there is significant volatility. Since the yen’s value surged during the weekend early morning Korean time, the exchange rate application varied by bank.

Some Branches Face Exchange Limit Shortages... Experts Advise Caution on Yen Investment

A Shinhan Bank official explained, "After the foreign exchange market closes on weekends, there are no large-scale fund transactions such as corporate fund trading in Korea," adding, "There was no urgent need to apply the new rates, nor was there a system error."

As Shinhan Bank’s exchange rate application lagged behind other banks, posts describing an ‘yen chaos’ began appearing on financial communities and social networking services (SNS). These posts detailed how people earned profits ranging from 10,000 to 20,000 won on small-scale non-face-to-face exchanges, to tens of thousands of won by involving family members. They used the ‘Safe’ service provided in the app to reconvert won without visiting branches.

Many customers also applied for yen exchange at branches in the morning to receive yen. With the lifting of Japan’s travel restrictions, customers exchanging currency for travel surged, causing some branches to run short of yen available for exchange. Shinhan Bank stated, "Due to an increase in mobile and internet exchange reservation applications at branches, the exchangeable limit for this foreign currency (JPY) is temporarily insufficient," and advised customers to "choose other branches."

Experts advised caution regarding yen investment. Professor Oh Jung-geun of Konkuk University’s Department of Economics said, "The yen has moved from the 150 yen level to the 147 yen level," adding, "Since the U.S. is expected to raise interest rates further in December, it is difficult to conclude that this is the bottom, and (yen investment) still carries risks."

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