Foreign currency deposits held by residents in South Korea fell by more than $15 billion in March, marking the largest decline on record, data showed on Wednesday.
According to data released by the Bank of Korea (BOK), the outstanding balance of resident foreign currency deposits at the country’s foreign exchange banks stood at $102.17 billion as of the end of March, down $15.37 billion from a month earlier.
It marked the largest decline ever, with the previous record decline being $11.73 billion set in February 2023.
Resident foreign currency deposits include deposits held domestically by Korean individuals, domestic companies, foreigners residing in Korea for more than six months, and foreign companies operating in Korea.
The decline was mainly driven by a sharp drop in U.S. dollar deposits and corporate deposits.
By currency, U.S. dollar-denominated deposits fell from $96 billion at the end of February to $85.64 billion at the end of March, down $10.36 billion, also the largest drop on record.
Euro-denominated deposits declined by $3.28 billion to $6.31 billion and Japanese yen-denominated deposits slumped $1.49 billion to $7.82 billion.
“The larger decline in U.S. dollar deposits came as corporate demand for Korean won increased due to payments to domestic business partners and corporate tax payments at the end of March, while a rise in the won-dollar exchange rate led to increased currency conversions,” a BOK official said.
“Other factors including decreases in securities firms’ investor deposits, overseas investment execution, and payments for current transactions also contributed to the decline,” the official added.
The won–dollar exchange rate surged by more than 90 won ($0.061), from 1,439.7 won at the end of February to 1,530.1 won at the end of March, driven by the impact of the Middle East conflict.
The BOK added that euro deposits declined due to remittances to overseas parent companies, while yen deposits fell due to decreases in investor deposits at securities firms and payments for current transactions.
By Kim Myung-hwan and Yoon Yeon-hae
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