Foreign-currency deposits held by South Korean banks fell in February as companies chose to pay their trade settlements with their U.S. dollar holdings while greenback stayed strong.

According to data released by the Bank of Korea (BOK) on Monday, foreign deposits held by local lenders totaled $73.68 billion as of end of February, down $840 million from the end of January. It is the first drop in two months after outstanding foreign currency deposits fell $590 million in December. It is also the largest fall since October, last year, when the value fell $5.52 billion.

Dollar-denominated holdings dropped $1.17 billion to $62.5 billion in February as companies used up savings to pay off import dues.

The strengthening in the greenback also upped dollar sales in the spot market.

The dollar added 1 percent from 1,112.7 won at the end of January to 1,124.7 won at the end of February. The outstanding amount of foreign currency savings drop when the dollar strengthens as investors tend to sell U.S. dollars.

Deposits in yen amounted to $4.55 billion, up $410 million, during the same period, as companies decreased spot exchange sales amid weakening of the yen. The yen fell 7.4 won to 1,015.4 won per 100 yen at the end of last month from 1,022.8 won at the end of January.

Euro-denominated savings increased $270 million to $3.71 billion while yen deposits dropped $290 million to $1.19 billion. Deposits held in other currencies including the pound sterling and Australian dollar also dropped $60 million to $1.73 billion.

By holder, companies held $59.21 billion in foreign-currency deposits, down $510 million during the same period, while individuals $14.47 billion, down $330 million, data showed.

By banks, local lenders held $63.05 billion in foreign-currency deposits, down $770 million, while local branches operated by foreign lenders $10.63 billion, down $70 million.

By Kim Yeon-joo and Lee Eun-joo

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