Foreign currency deposits in south Korea hit new high

Deposits denominated in foreign currencies hit a new high in South Korea last month as financial institutions continued to increase yuan deposits in Chinese banks for arbitrage trading, central bank data showed Monday. Foreign currency deposits by local residents reached a new record high of 58.42 billion U.S. dollars as of the end of April, up 7.32 billion dollars from a month earlier, according to the Bank of Korea (BOK). The previous high was 52.68 billion dollars tallied in February. Local residents refer to South Korean people or foreigners staying here for more than six months as well as local and foreign companies registered in the country. Chinese yuan-denominated deposits increased 2.02 billion dollars from a month earlier to 9.91 billion dollars as of end- April. Local financial companies continued to lift yuan deposits to win profits from arbitrage trading caused by higher interest rates offered by Chinese banks than South Korean lenders. Deposits denominated in the U.S. dollar expanded 4.78 billion dollars to 42.47 billion dollars in the same period, accounting for more than 70 percent of the total foreign currency deposits. Domestic companies, which settle for trades mainly with the dollar, increased the dollar deposits for settlement of exports and imports.