Foreign currency deposits in the Republic of Korea recorded their first increase in four months during May, supported by a rise in deposits at securities firms and the temporary placement of corporate overseas investment funds, according to official data released on Monday. The total outstanding foreign currency-denominated deposits held by residents in South Korea reached US$101.36 billion at the end of May. This figure represents a rise of US$5.1 billion compared to the previous month, as stated by the Bank of Korea (BOK). The increase ends a downward trend that had persisted since January this year.
The term “residents,” as defined by the BOK, includes Korean citizens, foreign nationals who have lived in the country for more than six months, and foreign enterprises operating within South Korea. Interbank foreign currency deposits are excluded from these statistics. Corporate deposits accounted for the majority of the overall increase, rising by US$4.6 billion from April to reach US$87.01 billion at the end of May. Individual foreign currency deposits also showed modest growth, increasing by US$500 million to a total of US$14.35 billion, according to the central bank.
In terms of specific currencies, US dollar-denominated deposits experienced the most significant growth. These deposits rose by US$4.54 billion to US$85.54 billion, largely driven by higher investor deposits at securities firms and the temporary placement of overseas investment funds by several corporations. The BOK attributed this movement primarily to strategic financial management by companies looking to optimize returns on foreign currency assets.
Meanwhile, euro-denominated deposits remained relatively stable, standing at US$5.09 billion by the end of May, showing no significant change from the previous month. Japanese yen-denominated deposits recorded an increase of US$560 million, reaching US$8.43 billion, reflecting increased demand for yen assets. Chinese yuan-denominated deposits, however, saw a decline of US$190 million, totaling US$980 million. The central bank attributed this decrease primarily to payments made for current transactions, including imports and other commercial obligations settled in yuan.
The latest figures highlight growing corporate and investor interest in foreign currency holdings amid fluctuating global financial conditions. Analysts suggest that South Korean firms are likely adjusting their foreign currency positions in response to evolving market dynamics, including exchange rate movements and international investment opportunities. The Bank of Korea is expected to continue monitoring foreign currency deposit trends closely as part of its broader efforts to ensure financial stability and assess external sector risks in the months ahead. – By MENA Newswire News Desk.