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Trend Reversal in U.S. Dollar Purchases

Purchases of the U.S. dollar have notably decreased after a spike late last year. This surge was largely due to expectations of a further decline in the Korean won, as industry sources noted. Interestingly, the reversal follows a series of interventions by foreign exchange authorities aimed at stabilising the currency.

Government Measures to Stabilise the Currency

Authorities employed a mix of strategies, including offering temporary capital gains tax exemptions. These were targeted at investors selling overseas stocks to reinvest in the domestic market. This move seemed to have an immediate impact.

Decline in U.S. Dollar Deposits

As per reports, the total balance of U.S. dollar deposits at South Korea’s five major banks—Shinhan, Woori, Hana, KB Kookmin and NH Nonghyup—stood at US$63.2 billion on Thursday. This marks a 3.8 percent reduction from the end of the previous year. Notably, companies, which make up 80 percent of these dollar deposits, saw a significant drop. Their deposits fell from $52.4 billion to $49.8 billion during the same period.

Changes in Currency Exchange Demand

Demand for currency exchanges from won to dollar has also lessened. As of this month’s third week, the total amounted to $364 million across the five major banks. However, the daily average exchange activity was $16.54 million, a 50 percent increase from last year’s daily average.

Interestingly, dollar-to-won exchanges saw a daily average of $5.2 million, surpassing last year’s $3.78 million. This suggests that many are choosing to sell dollars to capitalise on profits.

Gold Demand on the Rise

With the stabilisation of dollar demand, attention has turned to gold amidst market volatility. Speculation surrounding U.S. President Donald Trump’s unusual statement about acquiring Greenland has fuelled this interest. As of Thursday, accounts trading in gold at KB Kookmin, Shinhan, and Woori banks rose by 11.4 percent, reaching 2.1 trillion won ($1.44 billion).

Conclusion

In conclusion, while the fervour for the U.S. dollar appears to have cooled, other avenues like gold have garnered increased interest. These shifts highlight the dynamic nature of investments, influenced by both local and international developments.

For further insights, explore Yonhap News Agency.