South Korean banks' foreign currency deposits rise to 8 month high

Foreign currency deposits at South Korean banks rose to an eight-month high in July on higher export earnings and sales of foreign currency bonds, the central bank said Friday. Outstanding foreign currency-denominated deposits held by local residents reached US$36.57 billion as of end-July, up $2.71 billion from the previous month, according to the Bank of Korea (BOK). The July figure marked the highest level since November when such deposits hit $38.38 billion. Residents include individual citizens and firms but not foreign nationals with residency status. The data also excludes inter-bank foreign currency deposits, South Korean news agency (Yonhap) reported. Companies' holdings of FX deposits rose $2.38 billion on-month to $32.46 billion while such deposits held by individuals gained $330 million to $4.11 billion, it added. South Korea sustained the surplus run of the current account for the 17th straight month in June amid export gains and foreign capital inflows. BOK Gov. Kim Choong-soo has said the country's solid current account surplus has served as a buffer for the local financial market as bond yields are on the rise globally amid growing speculation about U.S. stimulus tapering. In June last year, the government unveiled plans to encourage local banks to secure more foreign currency deposits in a bid to protect against external shocks.(