Personal dollar and yen deposits have surged in South Korea. As the dollar and yen fell against the won, deposit balances expanded to levels not seen in several years.
Following last week's decline in the dollar to the low KRW 1,300s and the yen to the low KRW 830s, more individuals exchanged won for dollars and yen in advance. Many people are reportedly using the transactions for travel or investment.
According to figures compiled by South Korea's 5 major banks, personal dollar deposits stood at $14.23 billion as of the 15th, their highest level in 4 years and 10 months, since December 2021. Personal yen deposits stood at ¥265.62 billion, the highest since November 2024. Demand for buying the currencies at lower prices is said to have emerged following the dollar's and yen's declines.
The dollar averaged KRW 1,342.60 this month, its weakest level against the won in 2 years and 1 month since September, and dollar weakness accelerated to KRW 1,328.90 on the 16th. The yen averaged KRW 849.00 per ¥100 over the same period, its weakest level since December 2007. The backdrop is analyzed as strong semiconductor exports and expectations for an additional rate hike by the Bank of Korea.
Credit loan balances have also begun to rise again this month, prompting warnings that borrowing to invest could resurface following the sharp decline in the stock market. The KOSPI fell for 7 consecutive trading days during the period, declining 20.7% to 5,554.22. Personal credit loan balances at the 5 major banks rose 1.4% from the end of September to KRW 109.7121 trillion, while overdraft account balances expanded to KRW 44.4546 trillion.