South Koreans rush to hoard dollars amid weakening won

Yonhap

SEOUL, January 15 (AJP) - South Koreans have been hoarding U.S. dollars as the greenback continues its strong run.

According to financial data released on Thursday, individual customers of South Korea's five major banks -Hana, KB Kookmin, NH Nonghyup, Shinhan, and Woori - exchanged South Korean currency for U.S. dollars worth about US$480.81 million over the past three weeks.

The amount breaks down to $22.90 million per day on average, more than double the daily average of $10.43 million from January through November last year.

The main trigger was a strong verbal intervention by financial authorities on Christmas Eve, which briefly strengthened the won against the dollar and prompted individual investors to aggressively buy U.S. dollars.

The exchange rate fell 33.8 won that day and continued declining for three consecutive sessions, trading from the 1,480-won range to the 1,420-won range. Many seemed to consider it a buying opportunity, anticipating the won would soon weaken again.

The buying frenzy drove currency exchanges to about $63.04 million that day alone, nearly equivalent to an entire week's transactions. Demand was so high that several bank branches ran out of Benjamins.

Demand for dollars remained strong even as the won weakened again, with individuals exchanging US$17.44 million on Tuesday, reflecting a persistent hoarding spree.

In contrast, only $90.31 million was exchanged from dollars into won between Dec. 24 and last Tuesday, averaging $4.30 million per day.

Market analysts see that heavy dollar buying may reflect expectations of further gains in the exchange rate. The won has weakened for 10 consecutive trading sessions since the start of the new year, trading at 1,477.5 won per dollar on Wednesday.

Park Sang-hyun, an analyst at iM Securities, said, "The government's currency measures announced late last year have yet to show clear effects, failing to dispel concerns over the weakening won," adding that demand for foreign exchange has been driven mainly by individual investors buying foreign stocks.
Ahn Seon-young 기자 asy728@ajunews.com

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