Foreign-currency deposits slip in August

Foreign currency deposits at Korean banks declined in August from the previous month's record high as companies withdrew money to cover import bills, the central bank said Monday.

Outstanding foreign currency-denominated deposits held by local residents reached $35.83 billion as of the end of August, down $960 million from the previous month, according to the Bank of Korea (BOK).

The term residents in this usage includes individual citizens and firms but does not cover foreign nationals with residency status. The data also excludes inter-bank foreign currency deposits.

The BOK said some big exporters took out money after receiving export earnings in previous months and importers withdrew money to cover import bills.

"It may take more months to see how falls in exports and imports affect the value of banks' foreign currency deposits," a BOK official added.

Korea kept the trade surplus for the seventh straight month in August, but the surplus mainly resulted from drops in exports and imports, spawning concerns that demand at home and abroad is weakening amid the global economic slowdown.

Companies' holding of FX deposits fell by $1.07 billion on-month to $32.15 billion while such deposits held by individuals gained $110 million to $3.68 billion, the central bank added.

In late June, the government unveiled plans to encourage local banks to lure more foreign currency deposits in a bid to build a safety net from external shocks.

The BOK official said that sustained rises in FX deposits held by individuals seemed to be affected by the government's move to lure more such deposits.

Foreign currency savings accounted for about 3 percent of total bank deposits as of end-April, the latest data available showed. The government aims to raise that ratio to 10 percent. (Yonhap)