South Korea’s five largest commercial banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—reported a significant surge in dollar deposits, reaching $63.393 billion as of May 26, 2026. This $2.559 billion increase from the previous month reflects a 4.2% rise, driven by corporate demand for liquidity and trade settlements as the won-dollar exchange rate remains elevated near 1,500 won.
Why are dollar deposits rising in South Korean banks?
The increase in dollar holdings is primarily driven by corporate financial strategy. According to financial industry data from May 29, 2026, corporations boosted their dollar deposits by 6.4% in May to secure liquidity and manage trade settlements. While individual investors have been selling dollars to realize profits from the high exchange rate, the corporate sector’s demand for foreign currency has outpaced these sales. This trend follows a period of recovery for dollar deposits, which had dipped to $57.218 billion at the end of March 2026 before climbing for two consecutive months.
How does the current exchange rate influence investor behavior?
The won-dollar exchange rate, which has hovered around the 1,500-won threshold, serves as a major catalyst for shifts in bank deposits. Analysts note that this level creates extended currency pressure, forcing a divergence in behavior between retail and institutional holders. While individual investors are actively selling dollars to lock in exchange gains, corporations are prioritizing the retention of foreign currency. Market observers point to U.S. interest rate policy and ongoing US-Iran negotiations as the primary variables that will dictate the future trajectory of the won and, consequently, the appetite for dollar-denominated assets.
Comparison of deposit trends
Recent data highlights a volatile period for foreign currency holdings in South Korea’s major financial institutions.
| Period | Total Dollar Deposits (5 Major Banks) | Trend |
| :— | :— | :— |
| End of March 2026 | $57.218 billion | Baseline |
| End of April 2026 | $60.834 billion | Increase |
| May 26, 2026 | $63.393 billion | Continued Growth |
Earlier in 2026, the sector experienced a different dynamic; within the first three business days of January, these same five banks saw an influx of $1.985 billion in dollar deposits. At that time, total balances reached $69.179 billion, a notable increase from the $67.193 billion recorded at the end of December 2025.
What is the outlook for the won?
Financial analysts expect the exchange rate floor to remain supported by steady settlement demand from importers and the repatriation of proceeds from foreign stock sales. As the market monitors the 1,500-won level, the balance of dollar deposits will likely remain sensitive to shifts in global interest rates and geopolitical negotiations. The sustained demand for dollars suggests that corporations are bracing for continued currency volatility rather than betting on an immediate stabilization of the won.