Recognizing High Exchange Rates... May Dollar Deposits Decrease by $2.12 Billion

The Bank of Korea's 'May Resident Foreign Currency Deposit Trends'
Companies Delay Dollar Purchases Amid High Exchange Rate Perceptions

[Image source=Yonhap News]

Last month, as companies delayed their dollar purchases due to the perception that the won-dollar exchange rate was at a high level, dollar deposits decreased by $2.12 billion.

According to the "May Resident Foreign Currency Deposit Trends" data released by the Bank of Korea on the 21st, dollar deposits among resident foreign currency deposits at foreign exchange banks at the end of May fell by $2.12 billion compared to the end of the previous month.

Resident foreign currency deposits refer to domestic foreign currency deposits held by nationals, domestic companies, foreigners residing in Korea for more than six months, and foreign companies operating in Korea.

The total resident foreign currency deposit balance at the end of May was $88.96 billion, down $2.39 billion from the end of the previous month. The resident foreign currency deposit balance has been declining for five consecutive months: January (-$5.78 billion), February (-$1.97 billion), March (-$1.12 billion), and April (-$3.66 billion) of this year.

Lee Jong-chan, head of the Capital Movement Analysis Team at the Bank of Korea, explained, "Due to the perception that the exchange rate is at a high level, companies adjusted the timing of their dollar purchases for import payment settlements, resulting in a decrease in dollar deposits."

The won-dollar exchange rate rose from an average of 1,330.69 won in March to 1,367.83 won in April, then slightly declined to 1,365.39 won in May, but it still remains at a high level.

Euro deposits also decreased by $350 million compared to the end of the previous month due to import payment settlements and the expansion of domestic investment by some foreign companies.

On the other hand, yen deposits increased by $360 million as non-bank financial institutions' investor deposits and individual deposits rose amid expectations that the weak yen would turn strong.

By deposit holder, corporate deposits stood at $73.95 billion, down $2.56 billion from the previous month. In contrast, individual deposits increased by $170 million to $15.01 billion.

By bank type, deposits at domestic banks amounted to $78.86 billion, down $2.68 billion from the previous month. Meanwhile, foreign bank branches' deposits increased by $290 million to $10.1 billion.

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