Dollar hoarding lessens amid FX market stabilization efforts

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dollar hoarding-trend

Dollar hoarding lessens amid FX market stabilization efforts

SEOUL, Jan. 25 (Yonhap) -- 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 US$63.2 billion on Thursday, down 3.8 percent from the end of last year.

The dollar deposits of companies, in particular, which account for 80 percent of the total dollar deposits, fell sharply from $52.4 billion to $49.8 billion over the cited period.

Demand for currency exchanges from won to dollar also appears to have lessened, with this month's total through Thursday coming to $364 million at the five major banks.

The daily average currency exchange during this period was $16.54 million, up 50 percent from the daily average of last year.

But the total amount of exchange from dollar to won also reached a daily average of $5.2 million in the same period, far exceeding last year's daily average of $3.78 million, suggesting people increasingly sold their dollars to take profits.

As demand for the dollar has stabilized, demand for gold has risen amid volatility surrounding U.S. President Donald Trump's threat to acquire Greenland.

As of Thursday, the total balance of accounts at KB Kookmin, Shinhan and Woori banks that are allowed to trade in gold rose 11.4 percent from the end of last month to 2.1 trillion won ($1.44 billion).

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