Summary
- As the won-yen exchange rate rose to its highest level in two years, the yen deposit balance at the top five commercial banks decreased by 15% in one month to 909 billion yen.
- Yen-tech investors are taking profits as the yen value increases, which explains the decrease in yen deposit volume.
- Experts analyze that the yen may continue to strengthen due to expectations of Bank of Japan interest rate hikes and concerns about U.S. economic slowdown.
'Selling Wave' as Won-Yen Exchange Rate Soars
Decreased by 15% in February Alone to 909 Billion Yen
Last month, the yen deposit balance at the top five commercial banks plummeted by 15% in just one month. This is interpreted as the result of 'yen-tech' investors, who had been accumulating yen whenever its value was low, rushing to realize profits as the won-yen exchange rate jumped to its highest level in about two years last month.
According to the financial sector on the 6th, the yen deposit balance of the five major banks—KB, Shinhan, Hana, Woori, and NH—stood at 909 billion yen at the end of last month, a decrease of 160.3 billion yen (15.0%) compared to the end of the previous month (1.0693 trillion yen). This is the first time in 1 year and 6 months since August 2023 (995 billion yen) that the month-end yen deposit balance of the five major banks has fallen below 1 trillion yen.
The size of yen deposits tends to move in the opposite direction of the won-yen exchange rate. During the first half of last year, when the won-yen fiscal exchange rate (as of 3:30 PM) steadily declined from the 910 won per 100 yen range to the 850 won range, yen deposit balances increased compared to the previous month for six consecutive months from January to June. As a result, the yen deposit balance of the five major banks swelled to an all-time high of 1.2929 trillion yen at the end of June last year.
Since then, as Japan raised its benchmark interest rate and the domestic '12.3 martial law incident' caused the won-yen exchange rate to rise, domestic yen deposit balances gradually decreased. In particular, last month, the won-yen exchange rate recorded its highest level since May 17, 2023 (977.81 won) at 975.44 won per 100 yen as of the 28th, leading to concentrated yen selling, according to analysis.
Moon Nam-jung, a researcher at Daishin Securities, analyzed, "The yen is strengthening as concerns about a slowdown in the U.S. economy spread expectations for interest rate cuts, while the Bank of Japan is expected to continue raising its benchmark interest rate."
Reporter Jung Eui-jin justjin@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.
