As the won weakens and the won exchange rate falls to the ₩866 range per ¥100, yen deposits at South Korea's five major banks reached a record ¥1.3456 trillion. The figures were compiled as of the 25th, representing an increase equivalent to approximately ¥2.7 trillion from the end of the previous year.
Against a backdrop of won strength, the won exchange rate fell to ₩866.35 per ¥100, its lowest level in 2 years and 1 month. In tandem, yen deposits at South Korea's five major banks totaled ¥1.3456 trillion as of the 25th (approximately ₩11.6 trillion, or approximately ¥1.3 trillion), an increase of approximately ¥306.8 billion from the end of the previous year.
The previous record high for yen deposits was ¥1.2705 trillion in June 2024. While funds had previously flowed out as investors took profits when the yen was strong, the won's weakness is now believed to be driving an increase in yen deposits.
There is a view that an additional rate hike by the Bank of Japan will affect future trends. In a Reuters poll of economists, more respondents expected a rate hike in September, and Japan's interest-rate trends were cited as a factor that could sustain yen weakness.
The profitability of yen deposits is also said to have limitations. Domestic demand for yen deposits is weak and interest rates are near 0%, leading some to say that their appeal is limited compared with the yields on dollar and euro time deposits. There is a view that investors' inclination to buy yen will continue for the time being.