Last month, the balance of resident foreign currency deposits decreased by more than $4.9 billion, returning to a downward trend for the first time in two months. This happened because corporations and individuals sold foreign currency to realize exchange gains as the won-dollar exchange rate exceeded 1,460 won.
According to a Bank of Korea announcement on the 24th, the balance of resident foreign currency deposits at foreign exchange banks at the end of last month was reported at $98.53 billion, a decrease of $4.91 billion compared to the previous month. Resident foreign currency deposits refer to deposits held by nationals, domestic corporations, foreigners residing in the country for more than six months, and foreign corporations operating in the country.
Resident foreign currency deposits turned to a decline after consecutive increases in December last year (+$2.87 billion) and January (+$2.14 billion). The decline was the largest since October last year (-$5.1 billion).
By currency type, U.S. dollar deposits decreased by $3.79 billion to $84.52 billion. In particular, deposits from corporations accounted for most of the decline (-$3.64 billion). The Bank of Korea explained that the incentive for converting into won increased as the won-dollar exchange rate rose from 1,452.7 won at the end of January to 1,463.4 won at the end of February.
Yen deposits decreased by $530 million to $7.76 billion. Similarly, the increase in profit realization due to the rise in exchange rates affected this. The won-yen (100 yen) exchange rate skyrocketed from 939.0 yen at the end of January to 975.4 yen at the end of February. Euro deposits showed a decrease of $290 million compared to the previous month, totaling $4.16 billion.
By entity type, deposits from corporations decreased by $4.58 billion, while individual deposits decreased by $330 million. The balance at the end of February was reported at $84.62 billion and $13.91 billion, respectively.