The U.S. dollar deposits in Shinhan, KB Kookmin, Hana and Woori Banks increased from US$34.27 billion at the end of last month to US$37.42 billion on March 19 with the spread of COVID-19 leading to financial market fluctuations and a rapid increase of the won-dollar exchange rate.
Early this month, the exchange rate stood at 1,190 won per U.S. dollar. However, on March 19, it soared to 1,285.7 won per U.S. dollar along with the possibility of another global economic recession. That level is close to that of July 2009, when the repercussions of the global financial crisis in 2008 were yet to disappear.
Especially, this month, both individuals and enterprises hoarded the U.S. dollar even with the value of the South Korean currency continuing to decline. Last month, in contrast, they sold the U.S. dollar in quantity in order to realize foreign exchange gains.
According to the Bank of Korea, the foreign currency deposits in South Korea added up to US$68.51 billion at the end of last month, down US$6.47 billion from a month ago. Specifically, those of enterprises decreased by approximately US$4.8 billion and those of individuals decreased by about US$1.66 billion. However, the rush for the U.S. dollar began to accelerate on March 16 and enterprises now have to enhance their U.S. dollar liquidity.