Korean firms delay converting dollars into won as local currency strengthens

Korean corporations have postponed converting their dollars into won as the local currency has strengthened significantly. According to data released on Sunday, dollar deposits at Korea's five largest banks reached a record high of $76.98 billion as of Thursday, the highest level in 23 months. This surge in dollar deposits was primarily driven by companies holding onto U.S. currency due to the won's increased strength.

KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup collectively accounted for the highest deposit amount on record. The increase in dollar deposits came after a $6.9 billion rise in August and an additional $600 million in the first three days of September. The majority of the rise in corporate deposits can be attributed to exporters delaying the conversion of their dollar revenue into won, while importers gradually purchased the U.S. currency to prepare for future payments.

Additionally, individual deposits also saw a notable increase, reaching $13.68 billion, the highest level since February 2022. In August, individuals converted $389 million worth of won into dollars, the largest monthly amount since January, while conversions in the opposite direction were only about one-third as large.