Corporate dollar deposits peak in September as won strengthens: data

In September, corporate dollar deposits in major South Korean banks reached a record high of US$76.98 billion, according to industry data released on Sunday. This figure represents the highest level since banks started tracking such information in May 2021. The five major banks involved are KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup.

The exchange rate for the Korean won to the U.S. dollar reached its highest point in almost two years, trading at 1,345 won per dollar as of 10:30 p.m. Friday. This rate is a significant improvement from the all-time low of 1,588.2 won per dollar, which was recorded on July 1 of this year.

The surge in dollar deposits can be attributed to the inflow of export proceeds, as well as exporters delaying the exchange of their earnings to Korean won. Additionally, import companies have been actively purchasing U.S. dollars in installments. Baek Seok-hyun, an economist at Shinhan Bank's S&T Center, noted that demand for exchanging won into dollars is also increasing.

In the first three days of September, a total of $60 million was exchanged from the Korean won to U.S. dollars at the five banks, marking a sharp decline from the $275 million exchanged in February, the data revealed. This trend reversed in June, with only $164 million exchanged, before picking up again to $349 million in July. Individuals are also contributing to the demand for dollars, as the won-dollar exchange rate has fallen since July and August.

An official from NH NongHyup bank mentioned that there has been a rise in demand for the dollar to invest in U.S. stocks.