Purchases of the U.S. dollar have lessened in South Korea following a surge late last year prompted by expectations of further Korean won weakening, industry sources said. The trend reversal stems from foreign exchange authorities' stabilization measures, including temporary capital gains tax exemptions.
Purchases of the U.S. dollar have lessened following a surge late last year prompted by expectations of a further weakening of the Korean won, industry sources said Sunday. The trend reversal comes after foreign exchange authorities mobilized a range of measures to stabilize the currency, including temporary capital gains tax exemptions for investors who sell overseas stocks to invest in the domestic stock market.
According to the sources, the total balance of U.S. dollar deposits at the country's five major banks—Shinhan, Woori, Hana, KB Kookmin and NH Nonghyup—stood at $63.2 billion on Thursday, down 3.8 percent from the end of last year. The dollar deposits of companies, which account for 80 percent of the total, fell sharply from $52.4 billion to $49.8 billion over the period.
Demand for currency exchanges from won to dollar has also lessened, with this month's total through Thursday amounting to $364 million at the five major banks. The daily average exchange was $16.54 million, up 50 percent from last year's daily average. However, exchanges from dollar to won reached a daily average of $5.2 million, exceeding last year's $3.78 million, indicating increased profit-taking by selling dollars.
As dollar demand stabilizes, interest in gold has risen amid volatility from U.S. President Donald Trump's threat to acquire Greenland. As of Thursday, the total balance of gold-trading accounts at KB Kookmin, Shinhan and Woori banks increased 11.4 percent from the end of last month to 2.1 trillion won ($1.44 billion).
