© Archyde.com. ‘King Dollar’ goes until next year… Can I deposit dollars?[채선희의 금융꼬투리]
The photo is irrelevant to the article / Photo = The Getty Image Bank asset market is in crisis. This is because the dollar has been so strong that it is called the so-called ‘king dollar’. The stock market, which had been booming as investors’ preference for risky assets rapidly froze, is rapidly going downhill.
The virtual asset market has also been hit hard. With Bitcoin, a representative virtual asset, collapsing at $19,000 in two months, there is even a forecast that the next low could be $15,000. It is also noteworthy that the demand for even gold, which is considered a representative safe-haven asset, is declining. As gold is usually priced in dollars, an increase in the dollar has a negative effect on the price of gold.
Since the US central bank (Fed) took a giant step (a 0.75 percentage point increase in the key interest rate) in June, the dollar has been rising day by day while maintaining a tightening stance. The Dollar Index, which shows the value of the dollar against six major currencies, is at a 20-year high.
In addition to the European energy crisis and the depreciation of the Chinese yuan, the won-dollar exchange rate is expected to rise higher for the time being. If the won-dollar exchange rate breaks through the psychological margin of ‘1400 won’, the buying sentiment for the dollar is expected to become stronger. As the Fed plans to raise the key interest rate by the first half of next year, the market sees a high possibility that the dollar will continue to rise until next year. Strong Dollar Investors Grow Interest As risk asset prices fall and the dollar continues to strengthen, more and more investors are showing interest in dollar investments. The way to invest in dollars is to first buy dollars directly. Although it is the safest method, it is not a recommended investment method as it has limitations in terms of storage. Dollar investment methods include dollar deposits, exchange-traded funds (ETFs) and exchange-traded securities (ETNs) that track dollar indexes, and dollar repurchase agreements (RP).
Foreign currency deposits, which can be protected up to 50 million won according to the depositor protection limit, are considered an easy-to-access product for foreign currency tech beginners. Foreign currency deposits are products that allow you to enjoy foreign exchange gains due to exchange rate appreciation in addition to deposit interest. Comprehensive financial income taxation is also not levied on annual financial income exceeding 20 million won. The won/dollar exchange rate soared and broke through the 1,380 won per dollar level on the 7th for the first time in 13 years and 5 months. / Source = Hankyung DB foreign currency deposits are also called dollar bankbooks. When you open a foreign currency savings account at a bank, there are many currencies you can buy, such as dollars, yen, and euros, but most of them are in dollars. Put simply, it is a product that puts dollars in a bankbook, just like depositing Korean won. If you open a bank account and put money in it, it will be converted into dollars according to the exchange rate.
According to the Bank of Korea, as of July, resident foreign currency deposits at foreign exchange banks ($90.38 billion) increased by $3.32 billion from the end of the previous month. Of these, deposits in dollars alone increased by $2.86 billion. That’s a whopping 4 trillion won. Specifically, resident foreign currency deposits at domestic banks totaled $81.59 billion, increasing by $2.44 billion (3.39 trillion won) in just one month. Resident foreign currency deposits refer to foreign currency deposits held in Korea by Koreans and domestic companies, foreigners who have lived in Korea for more than 6 months, and foreign companies that have entered Korea. The balance of dollar deposits at the five major commercial banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, was estimated to reach 55 trillion won. Compared to January of this year, more than 5 trillion won of lump sum money flowed in. As the number of Hwantechs to realize foreign exchange profit increases, competition among banks is also intensifying.
When foreign currency deposits increase, the bank also benefits. Although it has become difficult to raise funds due to financial market instability, it is possible to secure foreign currency liquidity at a low cost through foreign currency deposits. Currently, representative foreign currency deposit products launched by commercial banks include Kookmin Bank’s ‘KB TWO Tech Foreign Currency Term Deposit’, Woori Bank’s ‘Woori The Dollar Foreign Currency Reserve Deposit’, Shinhan Bank’s ‘Foreign Currency Changeup Savings Account’, and Hana Bank. There is a ‘million dollar passbook’ of the bank.
However, there are opinions that it is necessary to be cautious about signing up for a dollar deposit now. This is because it is difficult to predict how much the exchange rate will rise, and it may be difficult to see a big profit as the dollar has already risen a lot.
There is also a growing sense of caution between the government and foreign exchange authorities. The authorities are showing strong will by sending several intervening signals saying, “The rate of depreciation of the won is faster than the fundamentals of the domestic economy. We will make an active effort to stabilize the market.” It cannot prevent the dominance of the dollar, but it cannot rule out the possibility that the uptrend will slow down.
An official from a commercial bank said, “Depositing in foreign currency is like investing in stocks,” and said, “It is better to start with an accumulation method from within the extra money rather than starting with a large amount from the beginning because there is a risk of losing the principal.” He emphasized, “As the price of the dollar is different when buying and selling, you need to consider expenses such as currency exchange fees before investing.”
Reporter Chae Seon-hee, Hankyung.com csun00@hankyung.com
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