Foreign-currency deposits held by South Korean banks increased for the first time in four months in May as companies withheld U.S. dollars in fear of further depreciation in the Korean won.
According to data released by the Bank of Korea (BOK) on Monday, foreign currency savings came to $65.61 billion as of end of May, up $2.41 billion from the end of April.
Foreign currency deposits held by Korean banks include those of Korean individuals and companies, foreigners that have stayed in Korea for six months or more, and foreign companies operating in the country.
The outstanding amount stood at $74.52 billion as of end of January, this year, before falling for three straight months until April when the balance went to as low as $63.2 billion.
Dollar-denominated holdings increased $2.19 billion from April to $55.65 billion as of end of May.
Dollar holdings usually drop during strengthening. But that was not the case in May as the market participants feared further weakening in the won as the trade war between the country’s top trade partners intensify.
The dollar rose from 1,168.2 won at the end of April to 1,190.9 won by the end of May.
Dollar deposits held by companies increased $1.44 billion to $43.61 billion. Industry watchers noted that export companies, in particular, delayed selling off dollars they received as settlement payment on fears of further gains in the greenback.
Payment deadline for some import companies was also delayed from the end of May to early June.
Dollar-denominated deposits held by individuals also increased $750 million to $12.04 billion as individual asset holders increased investments on safer dollar assets amid rising uncertainty in the global economy. Individuals accounted for 21.6 percent of total dollar-denominated deposits in May, the highest since June, 2012, when the central bank began compiling related data.
By Lee Yu-sup and Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]