Dollar deposits by companies at local banks rose at the fastest pace of the year in November despite a strengthening U.S. dollar. Outstanding balances at five major commercial banks reached $53.7 billion as of Thursday, up 21 percent from $44.3 billion a month earlier. The surge reflects firms' accelerated efforts to bolster dollar holdings amid rising U.S. investments and foreign exchange uncertainties.
Dollar deposits by companies at local banks in South Korea rose at the fastest pace of the year in November, even as the U.S. dollar strengthened. According to industry data released Sunday, outstanding corporate dollar deposits at five major commercial banks, including KB Kookmin Bank and Shinhan Bank, reached $53.7 billion as of Thursday, a 21 percent increase from $44.3 billion a month earlier. This marks the largest monthly gain in 2025.
Dollar deposits involve converting won into dollars for deposit, with options to withdraw or convert back to won at maturity. Typically, a stronger dollar prompts investors to lock in profits, reducing deposit balances. Yet, balances grew this month. Insiders attribute the expansion to increased U.S. investments and heightened uncertainties in the foreign exchange market.
"Following U.S. President Donald Trump's election last December, corporate currency exchange transactions and dollar deposit balances hit record highs," an official at a local bank said. "This month saw the largest increase so far this year."
Individual investors have also boosted their holdings, with outstanding dollar deposits at $12.2 billion as of Thursday—the fourth consecutive monthly rise since August. Demand is driven by growing investments in overseas stock markets and expectations of a stronger dollar.
"Amid recent volatility in the foreign exchange market, there is a trend, particularly among companies, to increase foreign currency holdings," a separate commercial bank official said. Meanwhile, the Korean won has depreciated sharply against the dollar despite authorities' repeated verbal interventions, falling from around 1,390 won per dollar on September 1 to about 1,470 won on Friday.