Dollar Deposits Surge by 15 Trillion Won in a Month, Exceeding $100 Billion for First Time

Foreign currency deposits held by residents in South Korean banks surged by over $15 billion in July, pushing the total balance to a record $128.34 billion. The U.S. dollar accounted for the lion's share of this growth, with dollar deposits alone increasing by $11.12 billion to reach $108.92 billion, surpassing the $100 billion mark for the first time since the Bank of Korea began its monthly tracking in June 2012.

This substantial rise in dollar holdings is attributed to several key factors. Record-breaking export performance has led to increased dollar earnings for domestic companies. Additionally, the issuance of U.S. stock depositary receipts (ADRs) by semiconductor giant SK Hynix, which raised approximately $26.5 billion, contributed significantly to the dollar inflow as these funds are being sequentially deposited into domestic bank accounts.

While the dollar saw the most dramatic increase, deposits in other major currencies also grew. Euro deposits rose by $2.22 billion, and yen deposits increased by $1.5 billion. This overall expansion in foreign currency deposits reflects a dynamic economic landscape influenced by international trade and corporate financial activities.

The strengthening of dollar deposits is a notable trend, with the Bank of Korea's Capital Movement Analysis Team leader, Choi Jae-hyuk, describing the increase as the "highest ever for a single currency." This trend underscores the significant role of the U.S. dollar in South Korea's economy, driven by both export revenues and major corporate financing activities.

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The increase in dollar deposits last month is the highest ever for a single currency.