"Exchange rates and Trump uncertainty"...Companies accumulating dollars, deposits reach 'highest' in 2 years
Summary
- Companies have increased their dollar deposits to the highest level in two years due to won-dollar exchange rate fluctuations.
- Corporate dollar accumulation is attributed to securing contingency funds amid expanding domestic and international uncertainties.
- The Bank of Korea explained that corporate deposits accounted for 99.5% of the total increase.
As the won-dollar exchange rate has been fluctuating significantly recently, companies have increased their dollar deposits to the highest level in two years. Export and import companies are particularly seen to be securing dollars for contingency purposes. The proportion of corporate deposits among total dollar deposits was at its highest in 8 years and 11 months.
According to the Bank of Korea's announcement on the 24th, resident foreign currency deposits at foreign exchange banks stood at $103.44 billion as of the end of January. This represents an increase of $2.14 billion from the previous month. Residents include Korean citizens, domestic companies, foreigners who have resided in Korea for more than 6 months, and foreign companies operating in Korea.
By currency, dollar deposits increased by $1.88 billion to $88.31 billion. 99.5% of the increase was in corporate dollar deposits. Corporate dollar deposit balance at the end of last month was $76.85 billion, up $1.87 billion from the previous month.
This corporate dollar deposit level is the highest in two years since January 2023 ($79.57 billion). The proportion of corporate deposits among total dollar deposits was 87.0%, the highest in 8 years and 11 months since February 2016 (87.3%).
A Bank of Korea official explained, "Dollar deposits increased due to export-import companies securing contingency funds amid expanding domestic and international uncertainties." Recent exchange rate volatility and uncertainty in the global trade environment following the potential Trump administration are believed to have influenced this dollar accumulation trend.
Yen deposits increased by $110 million. The Bank of Korea explained that the dollar conversion amount of yen deposits increased as the yen-dollar exchange rate fell from 157 yen to 154.5 yen per dollar over a month. Euro deposits increased by $80 million, and yuan deposits by $40 million.
Reporter Jinkyu Kang josep@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
