Companies Hoard Dollars as Foreign Currency Deposits Hit a 3-Year, 5-Month High

As the won–dollar exchange rate has climbed into the mid-1,500 won range and volatility has widened, companies' dollar deposits have reached their highest level in 3 years and 5 months. Export proceeds and funds for overseas investment or import payments appear to have remained in bank accounts instead of being exchanged into won.
According to the financial sector on the 14th, corporate dollar deposits at the five major banks, KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup, totaled $54.371 billion as of the 11th. That is the highest level since the end of January 2023, when the balance stood at $55.255 billion.
Corporate dollar deposits rose from $46.023 billion at the end of March to more than $50 billion at the end of May, then increased by $3.658 billion, or 7.2%, in just 10 days this month.
By contrast, individual dollar deposits rose from $12.56 billion at the end of March to $12.789 billion at the end of April, but fell to $12.275 billion at the end of May. The decline has continued, reaching $12.136 billion as of the 11th.
The trend suggests that export companies and other firms sensitive to exchange-rate swings are increasingly keeping their dollars at banks rather than converting them into won right away. From a corporate perspective, it is not easy to give up dollars amid the possibility of further exchange-rate gains and external uncertainty.
The won–dollar exchange rate has stayed above the 1,500 won level since May 15, and in night trading on the 5th of this month it briefly topped 1,560 won per dollar. Since then, it has remained highly volatile, falling back to the 1,510 won range on strong market-stabilization measures by the foreign exchange authorities, hopes for an end to the Iran war, and net buying of stocks by foreign investors.
The foreign exchange authorities are asking major companies to convert their export earnings. Earlier, the Ministry of Economy and Finance and the Ministry of Trade, Industry and Resources held a meeting with major exporters on the 11th and urged them to quickly exchange export proceeds and bring more overseas retained funds back into the country. The FSC and the FSS also asked commercial banks to refrain from marketing dollar deposits.

coddy@fnnews.com Ye Byung-jeong Reporter