Local banks stocking up on foreign currency

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Local banks stocking up on foreign currency

Foreign currency deposits at Korean banks jumped last month on the back of the local unit’s ascent against the U.S. dollar and the yen as well as worries about Europe’s debt crisis, data showed yesterday.

Foreign currency deposits held by five commercial banks rose 10.3 percent in January from a month ago to $19.73 billion, according to the data.

The January figure, compiled from Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank and the state-owned Industrial Bank of Korea, was a 38.5 percent jump from January of last year.

The strength of the Korean won against the greenback and the Japanese yen last month prompted local firms to add foreign exchange deposits, according to an industry official.

“Because of a steep rise in the local currency last month, there is a prevailing expectation that a further ascent of the won is unlikely,” said one bank official.

“Many customers are bargain hunting for foreign currencies on expectations that an end to the crisis in Europe and the U.S. is unlikely in the short run.”

Extension of the monetary easing by the U.S. and the deepening debt woes in Europe likely fueled the rise of the Korean currency.

The local currency closed at 1,123.3 won to the U.S. dollar on Jan. 31, compared with 1,155.8 won to the U.S. unit on Jan. 2. The won ended at 1,473.37 won to 100 yen as of Jan. 31, up from 1,502.99 won on the first trading day of the year.

Foreign currency-denominated loans edged up 1.1 percent in January from a month ago to $14.66 billion, according to the data. Yonhap

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