Over 1 Trillion Won Hoarded in 15 Days Amid Yen's Drop to 900-Won Range... Surge in Yen Deposits

[Image source=Yonhap News]

The value of the Japanese yen has declined, leading to a surge in yen deposits. This is driven by demand from forex investors (forex + asset management) expecting exchange gains, as well as companies that settle payments in yen accumulating yen funds. Additionally, with the increase in travel to Japan, more individuals are also buying and holding yen.

According to the financial sector on the 16th, the yen deposit balance at the four major banks (KB Kookmin, Shinhan, Hana, and Woori) was approximately 807.5 billion yen (as of the 13th). This is an increase of 109.7 billion yen (16%) compared to the end of last month when yen deposits surged (697.8 billion yen). The yen deposit balance has been steadily rising since April (578.9 billion yen). As of the end of last month, the yen deposit balance at the four major banks was 697.8 billion yen, up 119 billion yen (16%) from the previous month.

The sharp increase in yen deposits is due to the KRW/JPY exchange rate falling to the 910 won range. As of 3:30 PM on the 15th, it was recorded at 906.20 won per 100 yen. Compared to the situation in April when it traded at 1003.61 won per 100 yen, it has dropped to the low 900 won range in just two months. This is the first time in about eight years since June 2015. A representative from a commercial bank said, "The trend of accumulating yen continues," adding, "There is especially strong demand from companies that settle funds in yen."

With the increase in travelers to Japan, 'real demand' to buy yen when it is cheap and use it during travel is also rising. Although the interest rate on yen deposits at commercial banks is in the 0% range, a benefit is that there is no separate tax on exchange gains. Another bank official said, "If you sign up for yen deposits now and withdraw them later when traveling, even if you pay fees, you could benefit if the exchange rate rises." The withdrawal fee when converting deposits made in won to cash yen later is about 1.5%.

In the second half of last year, the US and South Korea raised their benchmark interest rates and entered a tightening policy, but Japan maintained a 'zero interest rate' monetary policy, causing the yen's value to fall sharply. However, recently, there have been prospects that the Bank of Japan (BOJ) might shift to a tightening monetary policy as early as the second half of this year, leading to expectations that the yen's value could rise. Nonetheless, a cautious approach is necessary when expecting a sharp rebound.

At this point, experts suggest that investing is worth considering if there is real demand such as travel. Jung Sung-jin, Deputy Head of KB Kookmin Bank Gangnam Star PB Center, said, "Buying yen now is not a bad idea," adding, "Although the deposit interest rate is low, if you gain from exchange rate differences, you can benefit from tax exemptions, so buying could be advantageous."

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