Yen deposits at 5 major banks top 1.14 trillion yen
Won-yen rate near 840 per 100 yen — lowest since 2008 — fuels 'yen-tech' demand
Yen-denominated deposits at South Korea's five major banks have grown nearly 6 percent in about a month as the won-yen exchange rate fell to the low 840-won range per 100 yen — the weakest level for the yen against the won in 18 years. Analysts say the slide is drawing in "yen-tech" investors betting on a future rebound.
The combined yen deposit balance at KB Kookmin, Shinhan, Hana, Woori and NH NongHyup banks stood at 1.14 trillion yen ($7.24 billion) as of Wednesday, according to the banking industry. That is up 5.6 percent, or 61.2 billion yen (about 518.8 billion won, or $387 million), from 1.08 trillion yen at the end of August. Compared with late May, when the rate was above 950 won per 100 yen, deposits have risen by 205.4 billion yen from 938.5 billion yen.
The drop in the won-yen rate to the 840-won range has spurred demand to buy yen at what many see as a bargain price. On Wednesday, the rate briefly touched 842.19 won per 100 yen — the lowest since Jan. 2, 2008, when it stood at 833.40 won. The rate was still above 910 won in early August, meaning it has fallen more than 60 won in roughly two months.
Strong semiconductor exports are seen as a key driver of the won's strength. Booming AI investment has lifted semiconductor shipments, and as export companies convert their dollar earnings into won, the currency has appreciated. Even as US Treasury yields and the dollar have risen in tandem, corporate dollar selling has absorbed pressure that would otherwise weaken the won.
The won-dollar rate fell as low as 1,336.30 won during intraday trading on Thursday. Month-end to month-end, the won strengthened by 125.4 won in July, 55.4 won in August and 15.8 won in September. So far this month through Thursday, it has advanced a further 14.3 won. The rate has now fallen more than 200 won from nearly 1,550 won at the end of June.
The yen, by contrast, has struggled to sustain its earlier gains. Since a coordinated Japan-US intervention in late July, the yen-dollar rate has swung back and forth. Reports last month that Japanese fiscal authorities had conducted a "rate check" — a step typically seen as a precursor to market intervention — briefly pushed the rate down to the 156-yen range, but it climbed back to the 158-yen range on Friday.
Concerns about a widening US-Japan interest rate gap driven by rising US Treasury yields, and worries that higher oil prices could worsen Japan's trade balance, have weighed on the yen. In a report on the risk of yen carry-trade unwinding released Thursday, Woori Financial Group's management research institute set out a base scenario in which fiscal instability in both the United States and Japan persists alongside continued rate hikes, concluding that a sharp yen appreciation is unlikely.
Baek Seok-hyeon, an economist at Shinhan Bank, said Japan's debt ratio exceeds 200 percent — far higher than those of the United States or France — and that cutting the food consumption tax has loosened fiscal discipline, stoking market concern. "The view that the Bank of Japan cannot tighten policy sufficiently because of the fiscal burden that high interest rates would impose is adding to the pressure on the yen," he added.
forest@heraldcorp.com
