South Korean companies are accumulating U.S. dollars instead of rushing to convert their export earnings into won, creating an unusual twist in the country’s rapidly changing foreign-exchange market.
Dollar deposits at the country’s five largest commercial banks reached a record $76.98 billion as of Thursday, according to financial-sector data reported Sunday.
Corporate accounts accounted for the overwhelming majority, with business dollar deposits reaching a record $63.3 billion.
The development comes as the Korean won has staged a dramatic recovery against the U.S. dollar.
The won closed at 1,345 won per dollar in the Friday night market, its strongest level since early October 2024. That represents a gain of more than 250 won per dollar from its July low, marking a sharp reversal from the currency’s weakness earlier this summer.
But instead of converting every incoming dollar into won, many companies are choosing to wait.
And that decision could become increasingly important for the currency market.
Why companies are keeping their dollars
The explanation is relatively straightforward.
Exporters receive revenue in U.S. dollars from overseas sales. When the won is weak, converting those dollars into won can generate more local currency.
But as the won strengthens, the same dollar buys fewer won.
That gives companies an incentive to be more selective about when they convert their foreign-currency earnings.
At the same time, importers are buying dollars gradually to cover future payments rather than purchasing all the currency at once.
Shinhan Bank economist Baek Seok-hyun told Yonhap that dollar deposits are increasing as export proceeds enter Korea while exporters delay conversion into won. Import companies are also purchasing dollars in installments.
The result is a striking contradiction: the won is getting stronger, while corporate dollar holdings are also climbing.
Dollar deposits hit a record
Data from KB Kookmin, Shinhan, Hana, Woori and NH NongHyup showed that combined dollar deposits reached $76.98 billion as of Thursday.
The total increased by more than $6.9 billion during August and rose another $600 million during the first three days of September, according to the Korea Times.
Corporate dollar deposits alone reached $63.3 billion, while individual dollar holdings climbed to $13.68 billion — the highest level for individuals since February 2022.
The trend is not entirely new.
Bank of Korea data released in August showed that total foreign-currency deposits held by Korean residents reached a record $128.34 billion at the end of July, with corporate foreign-currency deposits accounting for $112.56 billion.
The central bank attributed the increase partly to larger dollar receipts from exporting companies and funds held by local brokerages for overseas bond investments.
The won’s stunning turnaround
The latest movement marks a dramatic reversal for the Korean currency.
The won had traded above 1,500 per dollar in July, but subsequently strengthened rapidly as dollar supply improved and exporters sold more foreign currency.
On Sept. 4, the won reached 1,350.4 per dollar, its strongest level in 14 months at the time, according to Yonhap.
By the Friday night market, the rate had moved to 1,345, its strongest level since October 2024.
The turnaround has been supported by several factors, including increased dollar selling by exporters and foreign-currency inflows associated with SK hynix’s massive U.S. listing.
Reuters reported that South Korean foreign-exchange authorities purchased roughly $20 billion in U.S. dollars repatriated by SK hynix following the chipmaker’s $26.5 billion American depositary receipt offering in July.
The transaction was conducted through the Foreign Exchange Stabilization Fund and was aimed at helping stabilize the currency market while replenishing foreign-exchange resources.
Korea’s export boom is adding another layer
The stronger won comes at a time when South Korea’s export sector is performing exceptionally well.
Reuters reported that South Korean exports had already reached $709.4 billion by early September, surpassing the country’s previous full-year record of $709.3 billion.
Semiconductors have been the major engine, with chip exports accounting for roughly 41% of total exports and rising sharply amid the global artificial-intelligence investment boom.
That creates an important currency dynamic.
More exports mean more dollars entering Korea.
If companies convert those dollars into won, the additional dollar supply can put further upward pressure on the Korean currency.
But if companies hold onto the dollars instead, the immediate effect on the foreign-exchange market is smaller.
Companies may eventually bring more dollars home
The current situation could change as Korean corporations ramp up domestic investment.
The Korea Times reported that Samsung Electronics and SK hynix have announced a combined 800 trillion won in investment in Korea’s southwestern region.
Economist Ashok Bhundia of the Institute of International Finance said those projects could encourage the companies to repatriate and convert a larger portion of their export earnings into won to finance domestic capital spending.
That could provide another source of support for the Korean currency through the rest of 2026 and into 2027.
In other words, today’s dollar holdings could eventually become tomorrow’s won demand.
But the won’s rally is not guaranteed
Despite the recent surge, analysts warn that the currency’s gains could face resistance.
A renewed increase in U.S. inflation could strengthen expectations for higher U.S. interest rates, potentially supporting the dollar.
Higher U.S. Treasury yields could have a similar effect by making dollar-denominated assets more attractive.
The Korea Times reported that KB Kookmin Bank economist Moon Jeong-hee expects the exchange rate could settle into a lower range of around 1,300 to 1,350 won per dollar, assuming dollar supply continues to exceed demand.
That means the current strength of the won may not simply continue in a straight line.
Why this matters beyond South Korea
A stronger won can have mixed consequences for the Korean economy.
For consumers and import-dependent businesses, a stronger currency can reduce the won cost of dollar-priced goods, energy and other imported products.
For exporters, however, a stronger won can reduce the value of overseas revenue when converted back into local currency.
That makes the current situation particularly important for major Korean exporters, especially technology and manufacturing companies with substantial foreign-currency earnings.
The government’s concern over currency volatility also predates the latest rally.
In July, South Korean authorities urged major exporters to play a more active role in converting export proceeds and foreign-currency deposits into won and bringing overseas funds back to Korea.
The bigger question: How long can the won keep climbing?
For now, the foreign-exchange market is caught between two powerful forces.
On one side is strong dollar supply, fueled by exports, corporate conversions and major capital inflows.
On the other is persistent demand for dollars, including overseas investment, import payments and companies maintaining foreign-currency reserves.
The record corporate dollar deposits show that businesses are not simply betting on one direction.
They are managing their currency exposure while waiting for a potentially better moment to convert.
That makes the next phase particularly important.
If exporters eventually release more of their dollar holdings into the market while Korea’s semiconductor-driven export boom continues, the supply of dollars could increase further — potentially putting additional pressure on the dollar-won exchange rate.
But if U.S. inflation, Treasury yields or global risk conditions strengthen the dollar again, Korean companies holding those dollars could suddenly find that their decision to wait has paid off.
For now, Korea’s companies are sitting on a record mountain of dollars while the won climbs. The question is what happens when those dollars finally start moving.
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