The deposit balance of the five major banks in yen has fallen below 1 trillion yen for the first time in 18 months. The won exchange rate for the Japanese yen dropped to the 800 won range per 100 yen, prompting 'Yen Tech' investors who bought yen to start realizing profits, resulting in a consistent decline in the yen deposit balance since the second half of last year.
According to the financial sector on the 12th, the yen deposit balance of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) was 900.453 billion yen as of the 10th. This represents a 15.8% decrease from 1.0693 trillion yen in January and a reduction from the 909 billion yen at the end of February. The yen deposit balance falling below 1 trillion yen is the first occurrence since it recorded 995 billion yen in August 2023.
The won-yen exchange rate fell to the 850 won range per 100 yen in the first half of last year, leading to an increase in the yen balance. Many individual investors sought to buy yen cheaply, causing 'Yen Tech' to spread like a trend. Consequently, the yen deposit balance increased from 1.037162 trillion yen at the end of September 2023 to 1.06921 trillion yen at the end of January this year, remaining above 1 trillion yen for 17 consecutive months.
However, with Japan recently raising its base interest rate and the yen returning to strength, the won-yen exchange rate has continued to rise, causing the yen balance to flow out like a tide. Since recording 1.171 trillion yen in October last year, it has decreased to 1.2 trillion yen in December, and has dropped below 1 trillion yen since February.
The previous day, the won-yen exchange rate was traded at 989.85 won per 100 yen. This is an increase of 5.81 won compared to the reference rate at 3:30 p.m. on the 10th. Based on the closing price at 3:30 p.m., it is the highest since May 12, 2023 (990.39 won).
Some banks have already surpassed 1000 won. According to Hana Bank's exchange rate notice, the standard won-yen exchange rate for purchasing cash without preferential rates at bank counters closed at 1001.30 won (transaction standard rate of 984.08 won). As of the 7th, the exchange rates for Shinhan and Woori banks, as well as NH Nonghyup Bank on the 8th, also exceeded 1000 won. This marks the first time the won-yen exchange rate has exceeded 1000 won in three years, since March 2022.
As a result, the demand for profit realization among yen investors has reportedly increased in the market. Japan ended its 'negative interest rate' era last year and raised interest rates. There are also prospects that the Bank of Japan might raise rates one or two more times, but the trend of yen strength has become evident since the interest rate hike in January.
The strength of the yen is influenced by external factors as fears of economic slowdown due to U.S. tariff policies have spread, leading to increased yen purchases as a means of risk aversion, which has also pushed up the yen-dollar exchange rate. President Trump claimed on the 3rd that the Japanese yen and Chinese yuan are being intentionally depreciated and that this causes disadvantages for the United States.