South Korea’s foreign currency deposits rose for the second straight month due to strong demand for U.S. dollar deposits in July. The deposits, denominated in foreign currencies, gained $3.87 billion from a month earlier to $94.44 billion by the end of July, after recording an increase of $1.61 billion in June, Bank of Korea (BOK) data recently revealed.
In May, the country’s foreign currency deposits dipped $2.39 billion to $88.96 billion. The decline came as the strong dollar led companies to dump the U.S. currency. The average won-to-dollar exchange rate rose from 1,330.69 won in March to 1,367.83 won in April before slightly falling to 1,365.39 won in May.
The central bank attributed the consecutive growth to higher demand for the U.S. currency, driven by the temporary deposit of foreign currency bond issuance funds and the inflow of securities investment funds in South Korea.
U.S. dollar deposits jumped $4.57 billion dollars from a month earlier to $78.04 billion by the end of July.
The Japanese yen and the euro deposits, however, decreased to $10.1 billion and $4.13 billion, respectively. Meanwhile, the Chinese yuan deposit recorded $1.01 billion at the end of July, down $0.17 billion from a month earlier.
In addition, foreign currency deposits, owned by companies in South Korea, soared $3.85 billion dollars to $79.33 billion, while the individuals-possessed deposit added $0.02 billion to $15.11 billion in July.
The central bank also revealed that resident foreign currency deposits rose $3.87 billion to $4.44 billion in July. Residents include local citizens, foreigners who have stayed in Korea for more than six months, and foreign companies. The data excludes interbank foreign currency deposits.
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