South Korean Won strengthens as USD-KRW hits 13-month low

The South Korean Won strengthened significantly as the USD-KRW exchange rate dropped to 1,375.50 won on the 28th, marking its lowest level since July 25 of last year. This decline was primarily driven by domestic supply factors, specifically a concentration of dollar-selling activities by exporters at the end of the month seeking to convert holdings into local currency.

Parallel to the exchange rate fluctuations, foreign currency deposits held by residents in South Korea reached record levels. According to Bank of Korea data, total resident foreign currency deposits rose by $15.01 billion in July to reach $128.34 billion, the largest monthly increase since June 2012.

Notably, US dollar deposits surpassed the $100 billion threshold for the first time, reaching $108.92 billion. This surge was attributed to large corporations receiving current account payments, securities firms managing foreign bond issuance funds, and individuals and entities engaging in preemptive dollar purchases amid the falling exchange rate. Corporate deposits also hit a record high of $112.56 billion.