Resident Foreign Currency Deposits Decrease for the First Time in 4 Months Due to Strong Dollar

by Park Eugenie

Published 22 Sep.2023 12:00(KST)

Trends in Resident Foreign Currency Deposits in August
Down by 5.9 Billion USD from Previous Month
Dollar, Yen, and Euro All Decreased

As the value of the US dollar rose, resident foreign currency deposits decreased for the first time in four months last month. Deposits in dollars, yen, and euros all declined due to corporate payments for import settlements and overseas investments.

According to the "Resident Foreign Currency Deposit Trends for August 2023" released by the Bank of Korea on the 22nd, resident foreign currency deposits at foreign exchange banks stood at $99.1 billion at the end of August, down $5.9 billion from the end of July.

Resident foreign currency deposits had been declining continuously this year but turned to an upward trend starting in May. At the end of July, deposits exceeded $100 billion due to temporary deposits of corporate overseas procurement funds, but they decreased within a month. A Bank of Korea official explained, "This phenomenon occurred as the temporarily deposited procurement funds were withdrawn and the valuation amount decreased due to the strengthening of the US dollar."

Among resident foreign currency deposits, US dollar deposits decreased by $4.82 billion to $83.04 billion due to payments for import settlements, overseas investments by some companies, and a reduction in securities firms' investor deposits.

Euro deposits and yen deposits decreased by $790 million and $30 million respectively, to $5.23 billion and $8.28 billion, influenced by payments for import settlements and a decrease in valuation amounts due to the strengthening of the US dollar index. The US dollar index rose by approximately 1.7% in August.

By sector, corporate deposits stood at $84.44 billion, down $5.24 billion from the previous month, while individual deposits decreased by $660 million to $14.66 billion.