![The Japanese yen is a popular currency in South Korea.](https://cdn.businesskorea.co.kr/news/photo/202312/208194_208940_3744.jpg)
Foreign currency deposits held by Korean residents increased for the second consecutive month. Due to the prolonged historical trend of weaker yen, more investors are looking to purchase yen at favorable rates. Furthermore, an increase in export earnings deposited by businesses contributed to an increase in overall foreign currency deposits, including dollars and euros, held by residents.
According to the “Resident Foreign Currency Deposit Trends in November” released by the Bank of Korea on December 19, the foreign currency deposit balance of foreign exchange banks as of the end of last month reached $101.76 billion and increased. This was an increase of USD 7.46 billion compared to the end of the previous month. Residents refer to domestic individuals, domestic companies, foreigners residing in the country for more than six months, and foreign companies based in the country. Foreign currency deposits had declined since reaching $105 billion at the end of July, but rose to the $100 billion level for the first time in four months.
By currency, US dollar-denominated deposits had the largest increase, increasing by US$5.95 billion compared to the end of the previous month. This was followed by increases in yen and euro deposits by USD 1.31 billion and USD 180 million, respectively.
In particular, yen-denominated deposits saw a record increase last month, reaching US$9.92 billion, nearly US$10 billion. This was the first time that it exceeded US$9 billion, representing an astonishing increase of 62.3 percent compared to US$6.08 billion in the same month last year. The rapid increase in yen deposits is due to individual investors taking advantage of the historically weak yen, with the exchange rate reaching 800 won (approximately 0.61 USD) per 100 yen. The previous record increase was $1.23 billion in June.
The Bank of Korea said, “Investors’ deposits with securities companies and individual deposits increased.” Increased investment due to the weaker yen and increased demand for foreign exchange due to travel to Japan contributed to the rise. ” The exchange rate between the won and the yen fell from an average of 990.69 won per 100 yen in April to 872.93 won last month. This is the lowest price in 15 years and 11 months since December 2007, when it was 829.17 won.
By type of entity, corporate deposits increased by USD 6.54 billion, outpacing the increase in individual deposits by USD 920 million. Among banks, domestic banks increased by USD 7.66 billion, while foreign bank branches decreased by USD 200 million.