Why Did Foreign Currency Deposits in South Korea Decrease in September?
Synopsis
In September, South Korea experienced a drop in foreign currency deposits, largely influenced by rising overseas investments and corporate trade payments. This shift, revealed by the Bank of Korea, highlights the dynamic interplay between local and international financial strategies. Discover the full implications of these changes and how they reflect the broader economic landscape.
Key Takeaways
Foreign currency deposits in South Korea dropped by $550 million in September.
Pension funds increased overseas investments significantly.
Corporate payments for trade settlements contributed to the decline.
Deposits in U.S. dollars and yen saw substantial decreases.
Chinese yuan deposits experienced growth during this period.
Seoul, Oct 29 (NationPress) Foreign currency deposits in South Korea saw a decline in September due to heightened overseas investments from pension funds and corporate payments for trade settlements, according to data released by the Bank of Korea (BOK) on Wednesday.
The total outstanding foreign currency-denominated deposits held by residents amounted to $107.09 billion at the end of September, reflecting a reduction of $550 million compared to the preceding month, as reported by Yonhap news agency.
Residents include South Korean citizens, expatriates who have resided in the nation for over six months, and foreign enterprises. Notably, interbank deposits are excluded from this data.
Corporate foreign currency deposits witnessed a drop of $700 million month-on-month, totaling $92.26 billion, whereas individual deposits increased slightly by $150 million to $14.83 billion.
In terms of currency, deposits denominated in U.S. dollars fell by $240 million to $90.72 billion, and Japanese yen deposits decreased by $150 million to $8.89 billion. Euro deposits also dropped by $120 million to $5.01 billion.
Conversely, deposits in Chinese yuan rose by $60 million to $1.19 billion.
A BOK official explained, "The decline in dollar-denominated deposits is primarily attributed to a fall in margin deposits at securities firms, overseas investments by pension funds, and corporate payments for trade settlements."
Meanwhile, South Korean stocks continued to rise on Wednesday morning, primarily driven by the performance of chipmakers and other technology companies. The benchmark Korea Composite Stock Price Index surged by 56.77 points, or 1.42 percent, reaching 4,067.18.
Leading technology firm Samsung Electronics increased by 1.11 percent, while SK hynix saw a gain of 4.22 percent. The major search engine provider Naver soared by 5.73 percent, and Kakao rose by 8.01 percent.
Steel manufacturers also experienced gains, with POSCO Holdings up by 0.62 percent and Korea Zinc climbing 8.28 percent. As of 11:20 a.m., the local currency was trading at 1,433.8 won against the U.S. dollar, which is an increase of 3.9 won from the previous day's close.
Point of View
I believe that the decline in foreign currency deposits in South Korea reflects important shifts in investment strategies. While this may seem concerning, it underscores a proactive approach by pension funds and corporations to seek opportunities abroad, thus ensuring a robust economic outlook.
NationPress
10 May 2026
Frequently Asked Questions
What caused the decline in foreign currency deposits in South Korea?
The decline was primarily driven by increased overseas investments by pension funds and corporate payments for trade settlements.
How much did foreign currency deposits decrease?
Foreign currency deposits fell by $550 million, totaling $107.09 billion by the end of September.
What types of residents are included in the foreign currency deposit data?
The data includes South Korean citizens, foreigners residing in the country for more than six months, and foreign companies, excluding interbank deposits.
Which currencies saw a decline in deposits?
Deposits in U.S. dollars, Japanese yen, and euros all experienced declines in September.
Did any currencies see an increase in deposits?
Yes, deposits in Chinese yuan increased by $60 million during the same period.
