South Korea’s Foreign Currency Deposits Rise, Driven by U.S. Dollar Demand

South Korea’s Foreign Currency Deposits Rise, Driven by U.S. Dollar Demand

In a positive economic turn, South Korea witnessed an increase in foreign currency deposits for the third consecutive month in December 2023. According to data from the Bank of Korea, the total foreign currency deposits reached a staggering $103.88 billion by the end of the month, marking a substantial increment of $2.12 billion from the previous month.

Surge in U.S. Dollar Deposits

A significant portion of this growth can be attributed to the robust demand for the U.S. dollar. Deposits denominated in the U.S. dollar observed an increase of $1.96 billion, bringing the total to $85.79 billion. This uptrend is largely driven by companies depositing their export proceeds, thereby bolstering the economy.

Other Currency Deposits

Aside from the U.S. dollar, there was also a noticeable escalation in deposits for the euro and the Chinese yuan. The euro deposits climbed to $5.8 billion, while the Chinese yuan deposits touched $1.25 billion. Conversely, deposits in Japanese yen observed a minor decrease, dwindling by $0.22 billion to settle at $9.7 billion.

Corporate and Individual Deposits

On a more granular level, corporate-owned foreign currency deposits experienced a significant boost of $2.02 billion, culminating in a total of $88.26 billion. Meanwhile, deposits held by individuals witnessed a modest increase of $0.1 billion, resulting in a total of $15.62 billion. These figures highlight the growing economic strength of South Korean corporations and the rising affluence of its individual citizens.

Simultaneously, South Korea’s commitment to strengthening its domestic chip sector, accounting for about 16% of total exports, demonstrates the nation’s strategic moves towards self-sufficiency in semiconductors. With leading firms like Samsung Electronics Company and SK Hynix planning to spend more than $470 billion to establish the world’s largest chipmaking cluster, South Korea’s economic future seems promising.

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