South Korean corporations are accumulating large dollar-denominated deposits and refusing to convert them to won despite government requests to exchange export proceeds [1].
This trend signals a lack of confidence in the stability of the local currency. By hoarding dollars, firms are attempting to protect their assets from further won depreciation and broader external economic uncertainty [1].
Data from the five largest domestic banks — KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup — shows total corporate dollar-deposit balances reached 543.71 billion USD [1]. This figure represents a significant climb from earlier in the year. Balances stood at 462.3 billion USD at the end of March 2024, rising to 490.28 billion USD by the end of April, and reaching 507.13 billion USD by the end of May 2024 [1].
The accumulation accelerated into June 2024. Over a 10-day period in early June, corporate deposits increased by 36.58 billion USD, marking a 7.2% rise [1]. This surge pushed balances toward the 552.55 billion USD level seen at the end of January 2023, which remains the highest record for corporate dollar deposits [1].
While corporations are increasing their holdings, retail investors are moving in the opposite direction. Personal dollar-deposit balances fell by 13.9 billion USD, leaving a total balance of 121.36 billion USD [1].
Korean foreign-exchange authorities said firms should convert their export proceeds into won to stabilize the exchange rate. However, companies continue to retain dollars as a hedge against potential losses [1].
“Corporations are accumulating large dollar-denominated deposits and are reluctant to convert them to won.”
The divergence between corporate and retail behavior suggests that large-scale exporters view the won as a high-risk asset. When corporations ignore government requests to liquidate dollar holdings, it limits the effectiveness of state efforts to support the local currency and indicates a preference for the safety of the U.S. dollar over domestic monetary stability.
