As Exchange Rates Soar, Profit-Taking Occurs... Foreign Currency Deposit Balances Decrease for the First Time in Three Months
by Kim Yuri
Published 31 Mar.2025 12:00(KST)
Updated 01 Apr.2025 07:39(KST)
Resident Foreign Currency Deposits Fall to 98.53 Billion Dollars in February... Down 4.91 Billion Dollars
Dollar Deposits Drop by 3.79 Billion Dollars... Corporate Deposits Lead Decline Amid Exchange Rate Rise
Yen Deposits Decrease Due to Profit-Taking from Yen Appreciation; Euro Deposits Fall on Corporate Spot FX Net Sales
Resident foreign currency deposits decreased for the first time in three months. Deposits in dollars, yen, and euros all declined. It is analyzed that the rise in exchange rates increased the incentive for converting won to realize gains.
According to the "Resident Foreign Currency Deposit Trends for February 2025" released by the Bank of Korea on the 31st, as of the end of last month, resident foreign currency deposits at foreign exchange banks stood at 98.53 billion dollars, down 4.91 billion dollars from the end of the previous month. This marks a decrease after three months. Resident foreign currency deposits include foreign currency deposits held domestically by nationals, domestic companies, foreigners residing in Korea for more than six months, and foreign companies operating in Korea.
By currency, dollar deposits, which account for the largest share (85.8%) of resident foreign currency deposits, decreased by 3.79 billion dollars compared to the end of the previous month. A Bank of Korea official said, "Dollar deposits decreased mainly in corporate deposits (3.64 billion dollars) as the won-dollar exchange rate rise increased the incentive for converting won." The won-dollar exchange rate jumped from 1,452.7 won at the end of January to 1,463.4 won at the end of February.
Yen deposits and euro deposits also decreased by 530 million dollars and 290 million dollars, respectively. A Bank of Korea official explained, "Yen deposits declined due to resident profit-taking amid the rise in the won-yen exchange rate, and euro deposits decreased due to some corporate spot foreign exchange net sales." The won-yen (per 100 yen) exchange rate also rose from 939.0 yen at the end of January to 975.4 yen at the end of February, an increase of 36.4 yen.
By entity, corporate deposits fell by 4.58 billion dollars to 84.62 billion dollars, while individual deposits decreased by 330 million dollars to 13.91 billion dollars. By bank type, domestic banks saw a decrease of 3.87 billion dollars to 84.74 billion dollars, and foreign bank branches declined by 1.04 billion dollars to 13.79 billion dollars.
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