Dollar deposits hit record high despite weaker exchange rate, with corporate holdings up $12.23b in a month

Foreign currency deposits held by residents in South Korea hit a record high for the third consecutive month, as companies parked export earnings in domestic banks. The increase in corporate dollar deposits set an all-time record for a single month.

Foreign currency deposits at domestic foreign exchange banks stood at $154.71 billion at the end of September, the highest since the Bank of Korea began tracking the data in June 2012, the central bank said Wednesday. The balance rose $14.09 billion from the end of the previous month ($140.62 billion), extending a record-breaking streak for the third straight month.

The monthly increase was the third largest on record, trailing only last December's $15.88 billion gain and July's $15.01 billion increase.

Resident foreign currency deposits refer to foreign currency holdings in domestic accounts belonging to Korean nationals, domestic companies, foreigners who have resided in South Korea for at least six months, and foreign companies operating in the country.

By depositor type, corporate deposits rose $13.11 billion to $136.6 billion, marking a record high for the third consecutive month.

Individual deposits increased $980 million to $18.11 billion, the highest level since December 2021 ($18.77 billion).

By currency, dollar deposits climbed to $132.9 billion, setting a record for the fourth straight month. The month-on-month increase of $12.99 billion was the largest ever recorded.

Corporate dollar deposits reached $117.87 billion, a record for the fifth consecutive month. The monthly increase of $12.23 billion was also the largest on record.

Individual dollar deposits hit an all-time high of $15.03 billion, though the monthly gain of $760 million was smaller than the $1.03 billion increase seen in August.

The Bank of Korea said dollar deposits grew due to current account receipts by large conglomerates, inflows of investor deposits at securities firms, and proceeds from foreign currency bond issuances by state-owned enterprises.

Yen deposits totaled $9.49 billion, the highest in eight months since January ($9.51 billion), rising $550 million from the previous month as a weak yen prompted more travel-related currency exchange.

Euro deposits rose $370 million to $9.53 billion, the highest since February ($9.59 billion).

The Bank of Korea attributed the increase in euro deposits to current account receipts and similar inflows.

By institution, resident foreign currency deposits at domestic banks rose $9.18 billion to $120.04 billion, while branches of foreign banks increased $4.91 billion to $34.67 billion.