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Banks’ FX deposits jump in Oct. on currency volatility

South Korean banks’ foreign exchange deposits sharply rose last month as exports remained steady and high currency volatility led companies to buy the dollar, data showed Tuesday.

Foreign currency-denominated deposits held by top lender Kookmin Bank and four other banks totaled $17.1 billion as of the end of October, up $2.4 billion or 16.6 percent from a year earlier, according to industry data.

The sharp rise came mainly because capital inflows from export income continued and companies snapped up the greenback in anticipation of the won’s fall and put it into FX deposits.

The global financial markets are undergoing gyrations, hit by the deepening eurozone debt crisis and fears about the global recession. Prospects that Europe’s debt distress is likely to continue are making investors shun riskier assets.

The local currency fell 2.19 percent against the dollar in October, compared with the previous month.

Meanwhile, foreign currency-denominated loans declined in October as companies paid out part of their lending on fears that a weaker won incurs losses from foreign exchange conversion, data showed.

Such loans provided by local banks amounted to $15.5 billion as of end-October, down $73 million from the previous month, it added. 

(Yonhap News)
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