South Korea Resident Foreign-Currency Deposits Post Record $15.37 Billion Drop in March

Resident foreign-currency deposits at banks in South Korea recorded their largest monthly decline on record in March.

Outstanding resident foreign-currency deposits at foreign-exchange banks stood at $102.17 billion at the end of March, down $15.37 billion from a month earlier, according to data released by the Bank of Korea on April 22. The previous record decline was $11.73 billion at the end of February 2023.

Resident foreign-currency deposits refer to domestic foreign-currency accounts held by South Korean nationals, local companies, foreigners who have lived in South Korea for more than six months, and foreign companies operating in the country.

The drop was driven mainly by dollar deposits and corporate accounts. Dollar-denominated deposits fell by $10.36 billion from a month earlier to $85.64 billion.

Euro-denominated deposits declined by $3.28 billion to $6.31 billion, while yen deposits fell by $1.49 billion to $7.82 billion.

Corporate deposits and individual deposits decreased by $13.43 billion and $1.93 billion, respectively. The Bank of Korea said the decline accelerated as demand for won rose for corporate payments to domestic counterparties and for end-March corporate tax payments, while the higher exchange rate spurred currency conversions.

Retail investors' pullback from overseas assets also contributed. Declines in investor deposits at securities firms, offshore investment execution and current-account payments added to the decrease, the central bank said.

The won-dollar exchange rate rose by more than 90 won to 1,530.1 won per dollar at the end of March from 1,439.7 won per dollar at the end of February, driven by the impact of the Middle East war.

Shim Seong-mi, Hankyung reporter, smshim@hankyung.com