Dollar deposits at domestic banks have risen for three straight months. Individuals are cashing out foreign currency deposits and moving into the stock market, but corporations appear to be leaving export proceeds in banks without converting them into won for future investments.
On the 3rd, the foreign currency (dollar) deposit balance at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) rose from $59.007 billion (about 91.1363 trillion won) at the end of March to $65.852 billion (about 101 trillion won) at the end of June, an increase of about $6.8 billion (about 10 trillion won) over three months. As corporations and institutions, which account for about 80% of all foreign currency deposits, have significantly increased their dollar holdings since March, the total balance has grown.
Individuals peaked in February and have been declining. Individual dollar deposits at the five major banks fell by more than $1.5 billion, from about $13.636 billion at the end of February to $12.075 billion at the end of June. With the strong dollar-won exchange rate continuing since the start of the year, more people have come to believe the rate is unlikely to rise further.
With the government asking corporations to convert dollars and the foreign exchange authorities continuing verbal intervention, some say the chance of a further sharp rise in the exchange rate is low. A banking industry official said, "In recent months there has been virtually no demand for dollar deposits, and there have been many inquiries about withdrawing foreign currency deposits to put into stock market products such as semiconductor ETFs (exchange-traded funds)."
The government is asking corporations to convert dollars, but corporations are taking a cautious stance as they prepare for overseas investments. In the past, when export corporations performed well, demand to exchange dollars into won increased, which often eased pressure on the won's weakness.