In late February 2026, the Bank of Korea (BOK) released data showing that resident foreign-currency deposits in South Korea declined in January 2026, marking the first monthly drop after three consecutive months of increases. On the surface, a $1.4 billion decline may not look dramatic against a base of more than $118 billion, but when placed in the context of sharp KRW volatility from late 2025 into early 2026, it becomes a meaningful clue about how corporates and individuals are positioning in USD/EUR/JPY.

Key numbers: Down on the month, but still at elevated levels

According to the BOK, resident foreign currency–denominated deposits (held at domestic banks’ FX positions, excluding interbank deposits) stood at $118.03 billion at end-January 2026, down $1.4 billion from end-December 2025. This was the first month-on-month decline since October, after gains in November and December.

Breaking it down:

• Corporate deposits: down $1.82 billion to $100.06 billion

• Individual deposits: up $420 million to $17.35 billion

By currency:

• USD deposits: up $400 million to $96.34 billion

• JPY deposits: up $520 million to $9.51 billion

• EUR deposits: down $2.36 billion to $9.39 billion

• CNY deposits: down $70 million to $1.38 billion

The biggest takeaway: the overall decline was driven mainly by EUR, while USD and JPY still increased.

Why did FX deposits fall in January?

The drop was concentrated in EUR: corporates withdrew for settlement needs

Market coverage in Korea suggests January’s decline was largely due to corporates drawing down EUR balances especially portions that had been temporarily parked in December to meet trade payments and operating settlements.

In other words, this may reflect working-capital rotation and payment calendars rather than a full shift in “risk appetite.”

So why did USD and JPY deposits still rise?

This is the interesting part: USD deposits increased even as the total fell. That aligns with a broader reality: USD remains the dominant liquidity and “safe-haven” currency especially when local investors continue to expand overseas exposure.

Reuters-style market commentary during this period emphasized that Korea’s FX-stability challenge is complicated by persistent onshore USD demand, partly tied to strong retail appetite for U.S. equities. That steady conversion flow can keep USD demand firm even when headline deposit totals soften.

As for JPY, a reasonable reading is diversification plus regional trade/investment flows, and the fact that won dynamics can sometimes move in tandem with yen-related shifts depending on global risk conditions.

What do FX deposits tell us about market psychology?

Think of this indicator as a behavioral “thermometer”:

• Corporates often build FX deposits when:

  • They worry about FX swings raising import/hedging costs

  • They want USD/EUR on hand for cross-border settlement during volatile periods

• Individuals tend to add FX deposits when:

  • They expect further KRW weakness

  • They want diversification or are preparing for overseas spending/investment

January 2026 shows a “mixed” picture:

• Corporates reduced holdings (especially EUR) → consistent with settlement and cash-cycle normalization

• Individuals increased holdings → suggests defensive/diversification demand hasn’t disappeared

Soure: Korea Times