Foreign Currency Deposits Drop by $15.37 Billion in March...Largest Decline on Record

Bank of Korea Reports "Trends in Resident Foreign Currency Deposits for March"

Corporate Demand for Korean Won Rises, High Exchange Rates Drive Up Currency Exchange Volume

Last month, foreign currency deposits held by residents in Korea decreased by nearly 15.4 billion US dollars, led mainly by withdrawals in US dollars and corporate accounts. This marks the largest decline on record. The decrease was driven both by increased demand for Korean won by corporations and by a surge in currency exchange volume due to a rise in exchange rates.

An employee is sorting US dollars at the Hana Bank Counterfeit Response Center in Jung-gu, Seoul. Photo by Yonhap News Agency

According to the "Trends in Resident Foreign Currency Deposits for March 2026" released by the Bank of Korea on April 22, the balance of resident foreign currency deposits at foreign exchange banks stood at 102.17 billion US dollars as of the end of last month. This is a decrease of 15.37 billion US dollars compared to the end of February, marking the largest drop ever recorded. Resident foreign currency deposits refer to the foreign currency deposits held in Korea by Korean nationals, Korean companies, foreigners who have resided in Korea for more than six months, and foreign companies operating in Korea.

By currency, US dollar deposits, euro deposits, and Japanese yen deposits decreased by 10.36 billion US dollars, 3.28 billion US dollars, and 1.49 billion US dollars, respectively, compared to the end of the previous month. A Bank of Korea official stated, "The drop in US dollar deposits occurred as companies' demand for Korean won increased due to local transaction settlements and corporate tax payments at the end of March. At the same time, the appreciation of the exchange rate led to a higher volume of currency exchanges." The won-dollar exchange rate rose from 1,439.7 won on February 27 to 1,530.1 won on March 31. Additionally, the decline was amplified by a reduction in investor deposits at securities firms, overseas investment execution, and payments for current transactions. The decrease in euro deposits was attributed to remittances for settlement payments to overseas parent companies, while the drop in yen deposits was explained by a reduction in investor deposits at securities firms and payments for current transactions.

By deposit holder, corporate deposits (with a balance of 86.8 billion US dollars) and individual deposits (15.37 billion US dollars) decreased by 13.43 billion US dollars and 1.93 billion US dollars, respectively. By bank type, domestic banks (with a balance of 87.24 billion US dollars) saw a decrease of 11.36 billion US dollars, while foreign bank branches (with a balance of 14.93 billion US dollars) recorded a decrease of 4 billion US dollars.

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