Foreign currency deposits in South Korea declined for three straight months as demand for the Chinese yuan-denominated deposits weakened amid low interest rates in China, central bank data showed Friday.
Deposits denominated in foreign currencies amounted to 60.87 billion U.S. dollars as of end-July, down 3.8 billion dollars from a month earlier, according to the Bank of Korea (BOK). It marked the third straight month of decline after peaking at 68.04 billion dollars in April.
The U.S. dollar-denominated deposits edged up 420 million dollars from a month earlier to 40.43 billion dollars as of end- July, but the yuan deposits reduced 4.18 billion dollars to 14.32 billion dollars in the same period.
The yuan deposits gained strong popularity here in 2014, surging from 1.64 billion dollars in October 2013 to the record high of 21.7 billion dollars in October 2014.
As the South Korean central bank cut its policy rate to an all- time low, local residents put their money in the yuan deposits, which offered relatively higher deposit rates.
The BOK lowered its policy rate to a record low of 2 percent last year, before cutting it further by 25 basis points in March and June each this year to an all-time low of 1.5 percent.
As China's central bank lowered the benchmark interest rate this year, demand got increasingly weak for the yuan deposits here this year.