As businesses began a massive sale of U.S. dollars due to the rise in the won-dollar exchange rate last month, foreign currency deposits in South Korea in June reached a record low.
According to a report titled “Resident Foreign Exchange Deposit Trend in June 2017” released by the Bank of Korea (BOK) on July 14, the total resident foreign exchange deposits stood at US$63.61 billion (72.26 trillion won) as of the end of June, down US$6.33 billion (7.19 trillion won), or 9.1 percent, from the previous month.
Resident foreign exchange deposits refer to those owned by residents, including South Koreans and foreigners who have stayed here for over six months, and foreign companies which run business in South Korea.
The resident foreign exchange deposits reached record low levels in June. It also showed the biggest drop in four and a half years after posting -9.8 percent, or US$3.53 billion (4.01 trillion won), in January 2013. The BOK said, “As the won-dollar exchange rate slightly has increased, importers and exporters have started the spot foreign exchange sale.” The won-dollar exchange rate rose from 1,119.5 won against the dollar as of end-May to 1,441.1 won as of end-June.
The resident foreign exchange deposits reached a record high to US$70.54 billion (80.1 trillion won) at the end of March and have repeatedly waxed and waned since then. The dollar-denominated deposits declined by US$5.39 billion (6.12 trillion won), or 9 percent, to US$54.19 billion (61.53 trillion won) compared to the previous month. The figures showed a bigger decreasing amount of US$4.78 billion (5.43 trillion won) and a similar decreasing rate of 9.2 percent compared to those of May last year.
The dollar-denominated deposits owned by businesses amounted to US44.2 billion (50.18 trillion won), down 9.9 percent from US$4.87 billion (5.53 trillion won) in May. The dollar-denominated deposits owned by individuals totaled US$9.99 billion (11.34 trillion won), down US$520 million (590.36 billion won) from the previous month.
The yen-denominated and euro-denominated deposits also dropped by US$380 million (431.49 billion won) and US$360 million (408.78 billion won) to US$4 billion (4.54 trillion won) and US$2.68 billion, respectively, over the same period. The yuan-denominated deposits stood at US$1.22 billion (1.39 trillion won), down US$70 million (79.49 billion won).
By bank, resident foreign exchange deposits owned by domestic banks decreased by US$5.43 billion (6.17 trillion won) to US$544.4 billion (61.81 trillion won), while those owned by domestic branches of foreign banks dropped by US$900 million (1.02 trillion won) to US$9.17 billion (10.41 trillion won).
By ownership, the total foreign exchange deposits owned by businesses amounted to US$51.57 billion (58.55 trillion won), down US$5.73 billion (6.51 trillion) from the previous month. The foreign exchange deposits owned by individuals totaled US$12.4 billion (13.67 trillion won), down US$600 million (681.24 billion won).