ATMs at a commercial bank branch in Seoul [Yonhap]
ATMs at a commercial bank branch in Seoul [Yonhap]

A falling won-dollar exchange rate and volatile stock prices have reshaped the flow of funds at South Korean banks this month, with dollar deposits and gold investment rising sharply while ETF sales have plunged.

The combined dollar deposit balance at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup — stood at $74.92 billion as of Thursday, up $5.48 billion, or 8 percent, from $69.44 billion at the end of July, according to Yonhap.

That is the largest figure since the five-bank combined tally began in May 2021. Individual dollar deposits reached $13.22 billion, up $510 million from $12.71 billion at the end of July — the highest level since the end of February 2022, when they stood at $13.85 billion.

Corporate dollar deposits also climbed to $61.7 billion, the highest since the end of December 2022, when they totaled $62.05 billion.

The surge in dollar demand appears to reflect the won's rapid strengthening in recent weeks. The exchange rate, which had approached 1,556 won per dollar in early July, fell to the 1,380-won level during trading on Friday — its lowest in 11 months.

Gold-related product sales have also jumped. The five major banks sold 82.96 billion won ($59.6 million) worth of gold bars through Thursday this month, nearly three times the 30.01 billion won recorded for all of July and the highest monthly total since January, when sales reached 85.94 billion won.

Gold prices have been rebounding as easing US employment and inflation data have reduced concerns about further Federal Reserve rate hikes. International gold futures hit $4,420.40 per ounce in mid-August, up 9 percent from the end of last month.

Stock market volatility, meanwhile, has weighed on equity fund flows. ETF sales at the five major banks totaled 463.4 billion won through Thursday this month, down 1.9955 trillion won, or 81 percent, from July.

ETF sales peaked at 15.32 trillion won in May before slipping to 14.14 trillion won in June. In July, they fell 11.68 trillion won, or 83 percent, in a single month to 2.46 trillion won. August sales are down nearly 97 percent from the May peak and are on track to be the lowest since November 2023, when they came in at 458.9 billion won.


park.jiyeong@heraldcorp.com