Should I Change into Dollars...?

Dollar Holdings—

“Let’s first exchange and then see.”

As the high oil price and sluggish economy are further spreading the troubling sense of discomfort, the “foreign exchange-holding boom” is taking place again among some parts of the rich and middle class. The feelings of uneasiness is hinting that the “dollar buy-out,” rampant during the financial crisis, might be brought back.

Mr. A, a 30-year-old foreign investment bank employee, goes to his bank every pay day. He exchanges all the money except the living expenses into dollars and makes a deposit.

“With the uneasiness around the economy and the security, I haven’t found a good investment plan,” said A. “I can be slightly relieved with dollars in my hand.” He said that he has been managing a foreign exchange bank account for a year so far and also added, “Even though they are reluctant from saying this out loud, there are an increased number of people who are making deposits this way these days.”

According to the Bank of Korea, the residents’ foreign exchange accounts reached $19,140 million as of April 15, which is the highest amount ever. The percentage of personal owners, not corporate, with this type of account was 19 percent in 2002, 29 percent in 2003, and 30 percent this March.

“Wants of financial management and a vague uneasiness toward the future mixed up and created these personal demands for foreign exchange, in addition to the low domestic interest rates,” said an international team officer of the bank.

Some exchange into dollars without any special reasons.

“When I see customers who exchange won into dollars, there are many of them who just want to keep the dollars at home because of the bad economy,” said Kim, a manager in charge of foreign exchange at K Bank’s Seocho branch. For this purpose, there are cases in which all the members of a family went to a bank and exchanged for $10,000, the exchange limit for an individual, for each person.

“Partly it is due to uneasiness, but it also is a result of the customers’ realizing the importance of foreign exchange investment and a widened economic sense,” analyzed Team Manager Chung Yoen-ho of the main branch of the Korea Exchange Bank.