Dollar Deposits Surge by 9 Trillion Won as Exchange Rate Drops to 1400s

South Korean banks experienced a substantial increase in dollar deposit balances, with approximately 9 trillion won added as the won-dollar exchange rate fell into the 1400s. By July 9, the total dollar deposits across five major banks reached $70.94 billion, equivalent to about 106.79 trillion won. This figure represents the highest balance since late December 2022.

The surge has been particularly rapid in July. The dollar deposit balance grew by $5.86 billion, or 9%, from the end of June. This increase over just seven trading days has already surpassed the total growth of $2.056 billion seen throughout the entire month of June.

Analysts attribute this trend to the falling exchange rate. After the rate had been hovering above 1560 won per dollar, individuals who had previously sold dollars to realize profits are now buying them back at a lower price. Personal dollar deposits, which had decreased by $813 million over April and May, have now increased by $244 million this month.

Corporate dollar deposits have also continued their four-month upward trend, adding approximately $5.617 billion in July. This is likely driven by increased exports, particularly among semiconductor companies, leading to a buildup of funds for import payments and more active overseas investments, thus increasing demand for foreign currency.

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The dollar deposit balance is the largest since December 2022.