South Korean residents’ foreign currency deposits held at domestic banks totaled $140.62 billion (approximately 191.1 trillion won) as of end-August, setting yet another all-time high. The surge came as the won-dollar exchange rate dropped by more than 55 won in a single month, triggering a rush of preemptive dollar buying, alongside substantial inflows of export conglomerates’ current account receipts and brokerage investor custody deposits.
According to the “Resident Foreign Currency Deposits Trends for August 2026” released by the Bank of Korea on the 1st, the balance of resident foreign currency deposits at foreign exchange banks stood at $140.62 billion, up $12.28 billion (approximately 16.7 trillion won) from the previous month-end figure of $128.34 billion. This marks the largest amount since statistics began being compiled in June 2012. While the monthly increase narrowed from July’s $15.81 billion, the upward trend continued for a fifth consecutive month.
Resident foreign currency deposits refer to foreign currency-denominated deposits placed at domestic banks by South Korean nationals, domestic companies, foreigners who have resided in South Korea for at least six months, and foreign companies operating in South Korea.
Dollar Deposits Surpass $120 Billion for First Time
By currency, the growth in dollar-denominated deposits was particularly pronounced. Dollar deposit balances reached $119.91 billion at end-August, up $10.99 billion (approximately 14.9 trillion won) from the previous month. After crossing the $100 billion mark for the first time in July, dollar deposits posted another substantial gain in August, climbing to the threshold of $120 billion.
The Bank of Korea attributed the sharp rise in dollar deposits to large corporations receiving current account payments, inflows of brokerage investor custody deposits, and preemptive dollar buying amid the falling exchange rate. As the won-dollar exchange rate declined from ₩1,424.0 at end-July to ₩1,368.6 at end-August, more market participants moved to purchase dollars in advance, anticipating a rebound in the dollar’s value.
Deposits in other major currencies also rose in tandem. Euro-denominated deposits increased by $1.1 billion (approximately 1.5 trillion won) from the previous month-end to $9.16 billion, supported by current account receipt inflows. Yen-denominated deposits climbed by $320 million (approximately 430 billion won) to $8.94 billion, driven by brokerage investor custody deposit inflows.
Corporate Deposits Lead the Increase; Corporate Dollar Deposits Top $100 Billion for First Time
By economic entity, corporate deposits accounted for the bulk of the overall increase. Corporate foreign currency deposit balances rose by $10.93 billion (approximately 14.9 trillion won) from the previous month to $123.49 billion, reaching a record high. Within this total, corporate dollar-denominated deposits increased by $8.81 billion to $105.64 billion, surpassing the $100 billion mark for the first time.
Individual deposits also showed a solid trend. Individual foreign currency deposit balances stood at $17.12 billion, up $1.35 billion (approximately 1.8 trillion won) from the previous month. Individual dollar-denominated deposits rose by $1.03 billion to $14.27 billion.
By bank type, foreign currency deposits at domestic banks totaled $110.86 billion, up $8.47 billion from the previous month. Foreign bank branches in South Korea recorded $29.76 billion, an increase of $3.81 billion.
Key indicators are summarized below.
| Item | End-August Balance | Month-over-Month Change |
|---|---|---|
| Total Resident Foreign Currency Deposits | $140.62 billion | +$12.28 billion |
| Dollar-Denominated Deposits | $119.91 billion | +$10.99 billion |
| Euro-Denominated Deposits | $9.16 billion | +$1.10 billion |
| Yen-Denominated Deposits | $8.94 billion | +$320 million |
| Corporate Deposits | $123.49 billion | +$10.93 billion |
| Individual Deposits | $17.12 billion | +$1.35 billion |
Note: Month-over-month changes are rounded figures; totals may not match exactly.
Exchange Rate Decline Triggers Dollar Buying; Foreign Currency Deposit Growth Expected to Continue
The surge in foreign currency deposits is notable in that the decline in the won-dollar exchange rate served as a direct trigger. Typically, when the exchange rate rises, demand to sell dollars and realize gains increases, while a falling exchange rate strengthens the inclination to buy dollars at lower levels. In August, as the won’s strength became pronounced, both corporations and individuals responded by increasing their dollar-denominated deposits.
The fact that corporate dollar deposits surpassed $100 billion for the first time reflects a tendency among export companies to hold dollar receipts in the form of foreign currency deposits rather than immediately converting them to won during periods of won strength. Additionally, the inflow of brokerage investor custody deposits into foreign currency deposits also contributed to lifting the overall balance.
If dollar buying demand persists as the exchange rate stabilizes following its sharp short-term decline, resident foreign currency deposits are likely to remain at elevated levels or increase further in the near term. However, if exchange rate volatility intensifies, the direction of foreign currency deposit changes could shift rapidly, making the future trajectory of the won-dollar exchange rate a key variable to watch.
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