Bank of Korea study links dollar stablecoins to local currency pressure

A study by the Bank of Korea indicates that demand for dollar-backed stablecoins, such as USDT and USDC, can exert downward pressure on local currencies in emerging markets. This effect is particularly pronounced when global exchanges like Binance offer direct trading pairs between local fiat and stablecoins. In such scenarios, market makers may sell local currency to acquire dollars to balance their positions, leading to currency depreciation.

In Brazil, researchers observed that increased demand for stablecoins was associated with a depreciation of the real. Conversely, the study found a weaker direct link to the South Korean won because Binance lacks direct won-stablecoin trading pairs, meaning demand currently impacts stablecoin premiums rather than the immediate foreign exchange market. However, the Bank of Korea warned that this link could strengthen if corporate and foreign participation in domestic crypto exchanges increases.

Separately, South Korean commercial banks have reported a record high in corporate dollar deposits, reaching $76.98 billion. This surge is attributed to exporters delaying the conversion of foreign earnings into won and import companies actively purchasing U.S. dollars.