Yen deposits at Korean banks surge to record $9.9 bn

Yen deposits at South Korean banks grew by the largest-ever monthly amount in November to a record $9.92 billion, central bank data show, as investors raised their bets on further gains in the Japanese currency recovering from its 15-year trough.

Amid expectations Japan would end the years of its negative rate policy, the balance of yen deposits at domestic lenders swelled by $1.31 billion to $9.92 billion as of the end of November from the month previous, according to the Bank of Korea on Tuesday.

The monthly deposit growth broke the previous record of the $1.23 billion increase set in June this year.

The November balance represented a 63.2% surge from the year prior. It marked the first time the balance of yen deposits at domestic banks surpassed the $9 billion threshold and the second consecutive month of deposit growth.

Last month, the yen plunged to 8.7 to the Korean won, its lowest point since February 2008. On Tuesday, it ended little changed at 9.10 per won in local trade, versus Monday's close of 9.11. 

The sharp increase in yen deposits was attributed in part to the rise in won-to-yen conversion demand from Korean travelers amid the view the Japanese currency seems to have bottomed out.  

Korean investors, both corporate and individual, are expected to continue to ramp up investment in the yen, waiting for Japan's monetary policy shift. On Tuesday, the Bank of Japan kept its ultra-low interest rates unchanged as widely expected.

The balance of deposits in other currencies increased as well. Dollar deposits grew by $5.95 billion on-month to $83.83 billion as of the end of November, boosted by export growth and the rise in investor money entrusted by brokerage companies.

Euro deposits edged up $180 million on-month to $5.51 billion as the strengthening European currency boosted its translation value.

In total, the balance of foreign currency-denominated deposits at Korean banks reached $101.76 billion as of end-November, recovering to the $100 billion level since hitting $105.00 billion in July this year.

It broke down to $86.24 billion for corporate accounts, an on-year gain of $6.54 billion; and $15.52 billion for individual accounts, an $920 million increase.

Write to Jin-Gyu Kang at josep@hankyung.com
 

Yeonhee Kim edited this article.