Dollar deposits held by South Korean residents approached $120 billion at the end of August, a record high, as companies and individuals bought the U.S. currency ahead of an expected rebound.
Foreign currency deposits held by residents at domestic foreign exchange banks totaled $140.62 billion at the end of August, up $12.28 billion from the previous month, the Bank of Korea said on the 1st. That is the highest level since the central bank began compiling the data in June 2012. The monthly increase was smaller than July's $15.81 billion gain, but marked a fifth straight month of growth.
Resident foreign currency deposits include accounts held in South Korea by Korean nationals, domestic companies, foreigners who have lived in the country for at least six months and foreign companies operating locally.
By currency, dollar deposits rose sharply. The dollar deposit balance stood at $119.91 billion at the end of August, up $10.99 billion from a month earlier. Dollar deposits had topped $100 billion for the first time in July, when they rose $11.12 billion, and posted another large gain in August.
The central bank said the increase stemmed from large companies receiving payments on current account transactions, inflows of investor deposits at securities firms and front-loaded dollar purchases following the currency's decline. The won-dollar exchange rate fell to 1,368.6 won at the end of August from 1,424 won at the end of July, prompting companies and others that need dollars to buy early on expectations that the currency would gain value.
Euro deposits rose $1.1 billion to $9.16 billion, while yen deposits increased $320 million to $8.94 billion. The Bank of Korea said euro deposits grew on current account receipts and yen deposits on inflows of investor deposits at securities firms.
By holder, corporate foreign currency deposits rose $10.93 billion to $123.49 billion, a record high. Of that, dollar deposits held by companies increased $8.81 billion to $105.64 billion, topping $100 billion for the first time.
Individual deposits rose $1.35 billion to $17.12 billion. Dollar deposits held by individuals increased $1.03 billion to $14.27 billion.
