"Let's Buy Dollars" Foreign Currency Deposits Reach Record High Amid COVID-19 Uncertainty

Published 22 Jul.2020 14:04(KST)

'Trends in Resident Foreign Currency Deposits in June 2020'

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] Resident foreign currency deposits increased in June as corporate and individual dollar deposits rose.

According to the "Resident Foreign Currency Deposit Trends in June 2020" released by the Bank of Korea on the 22nd, as of the end of June, resident foreign currency deposits at foreign exchange banks amounted to $84.53 billion, an increase of $3.61 billion compared to the end of the previous month.

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

Resident foreign currency deposits have been increasing since March and have maintained an upward trend for four consecutive months. The foreign currency deposit balance at the end of June is the largest since the statistics were first compiled in June 2012.

By entity, corporate deposits in June ($67.13 billion) increased by $2.19 billion in one month, and individual deposits ($17.4 billion) also rose by $1.42 billion.

By currency type, dollar deposits ($73.46 billion) and yen deposits ($4.52 billion) increased by $3.54 billion and $530 million respectively compared to May, while euro deposits ($3.61 billion) decreased by $530 million.

A Bank of Korea official explained the background of the increase in foreign currency deposits, saying, "In the case of the dollar, deposits for payment by general companies and net purchases of spot foreign exchange by individuals have increased," adding, "It appears to be a trend anticipating a future dollar strength (won-dollar exchange rate rise)."