Dollar deposits surge W9tr in a month as won-dollar rate falls

Lee, a 37-year-old office worker, recently faced a decision about what to do with funds from a maturing savings account: buy more Samsung Electronics or SK hynix shares, or do something else. With the share price volatility of the two chipmakers — once known for delivering double-digit returns — widening sharply, and the won-dollar exchange rate falling into the 1,300-won range, he ultimately chose to stock up on dollars instead. "I asked friends who invest, and many of them said that if you're thinking about buying US stocks, you should buy dollars first while the exchange rate is low," Lee said. "So I used part of the savings account proceeds to buy dollars."

As the won-dollar exchange rate has fallen sharply, dollar deposits at major banks have been growing rapidly. Resident dollar deposits in South Korea hit a record high last month, and an additional roughly $6.79 billion has flowed into dollar deposit accounts at the five major banks so far this month.

Dollar deposit balances at KB Kookmin, Shinhan, Hana, Woori and NH NongHyup banks — the country's five largest — stood at approximately $76.27 billion as of Thursday, up $6.79 billion, or 9.8 percent, from roughly $69.48 billion at the end of July. At recent exchange rates, that represents an increase of around 9 trillion won in roughly one month.

Dollar deposits had briefly declined in March, when the won-dollar rate surged and some depositors took profits, but they have since resumed their upward trend. After recovering to the $63 billion range in May, balances crossed $65 billion in June, approached $70 billion by the end of July, and surpassed $76 billion this month.

The same trend appeared in Bank of Korea data. According to the central bank's report on resident foreign-currency deposits for July 2026, released Friday, dollar deposits held by residents at foreign-exchange banks totaled $108.92 billion at the end of July — up $11.12 billion from the previous month. That was the highest level since the statistics were first compiled and marked the first time the figure has exceeded $100 billion. Total resident foreign-currency deposits also hit a record $128.34 billion.

Corporations drove the increase. Corporate foreign-currency deposits rose $13.57 billion in a month to $112.56 billion, with dollar-denominated deposits among them climbing $10.11 billion to $95.69 billion. Individual foreign-currency deposits also grew, rising $1.44 billion to $15.77 billion.

The recent surge in dollar deposits reflects a combination of pre-emptive dollar buying spurred by the falling exchange rate and foreign-currency inflows from companies and financial institutions. The Bank of Korea cited several factors behind the July increase: receipt of trade settlement payments by large conglomerates, proceeds from foreign-currency bond issuances by securities firms and related customer deposits, and pre-emptive dollar purchases driven by the declining won-dollar rate.

The won-dollar rate fell more than 125 won in a single month, dropping from 1,549.4 won at the end of June to 1,424.0 won at the end of July, and has since fallen further into the 1,300-won range this month. As the relative cost of dollars has declined, demand to secure dollars in advance — for future overseas stock investments or foreign-currency payments — appears to have grown.

Not all of the recent increase in dollar deposits, however, can be attributed to investment-driven funds betting on a rebound in the exchange rate. A significant portion reflects foreign currency received through corporate current-account transactions such as export proceeds, as well as funds raised through securities firms' foreign-currency bond issuances.

Market analysts expect the won-dollar rate to fluctuate in the 1,300-won range for now, with the pace of any further decline likely to slow. Oh Jae-young, a researcher at KB Securities, forecast that "the dollar-won rate is expected to move within a range of roughly 1,350 to 1,450 won for some time." He added that if foreign investors resume selling domestic stocks on a larger scale, "the dollar-won rate could rebound to the 1,400-won range from its current level."

Meanwhile, as volatility in the domestic stock market has increased, funds parked on the sidelines have fallen sharply from their peak. According to the Korea Financial Investment Association, investor deposits stood at 103.01 trillion won ($74.6 billion) on Monday — down more than 36 trillion won from the 139.69 trillion won recorded on June 4. On Aug. 11, the figure dropped to 97.93 trillion won, falling below 100 trillion won for the first time in about six and a half months.