As currency and stock prices decline, funds are moving to take advantage of bargain buying opportunities. With the prices of the dollar and yen falling, foreign currency deposit balances have increased, and personal credit loans have also risen amid a sharp drop in the stock market. This trend suggests that investors are viewing lower asset prices as buying opportunities. However, concerns are growing that if stock prices do not recover, those who borrowed to invest may face increased repayment burdens.
According to the financial sector on October 18, the balance of personal credit loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) was recorded at 109.7121 trillion won as of October 15. This marks an increase of 1.4818 trillion won (1.4%) from the end of last month (108.2303 trillion won).
The majority of this increase came from overdraft accounts. The balance of overdraft accounts rose from 42.9834 trillion won to 44.4546 trillion won, an increase of 1.4712 trillion won (3.4%). This accounts for 99.3% of the total increase in personal credit loans. In terms of balance, this is the highest level since August 2022 (44.7699 trillion won). The KOSPI index fell 20.7% over seven consecutive trading days from October 6 to 15, prompting investors to secure funds for investment through overdraft accounts, viewing the market correction as a buying opportunity.
In the foreign exchange market, both dollar and yen deposit balances have increased. As of October 15, the balance of dollar deposits at the five major banks was $78.78 billion, a 34.1% increase from the lowest level this year at the end of March ($58.76 billion). Among these, personal dollar deposits reached $14.23 billion, the highest level in nearly four years and ten months since December 2021 ($14.65 billion). The yen deposit balance was recorded at 1.14627 trillion yen, the highest since October 2024 (1.15422 trillion yen), with personal yen deposits also increasing by 11.6 billion yen (4.6%) to 265.62 billion yen.
The won-dollar exchange rate fell to 1,328.9 won on October 16, marking the lowest level since October 2, 2024, while the won-yen exchange rate dropped to 839.9 won per 100 yen on October 12, the lowest since January 2008.
The increase in dollar deposits is attributed to rising buying demand due to the currency's decline, as well as a slowdown in U.S. stock investments, leading dollar funds to remain in deposits, according to financial sector analysts. The rise in yen deposits is analyzed as a combination of expectations for profits from potential currency rebounds and demand to secure yen ahead of upcoming trips to Japan.
However, using loans for stock investments could become burdensome depending on market trends. Jo Dong-geun, an emeritus professor of economics at Myongji University, stated, "If the stock market recovery is delayed or prices fall further, individuals who borrowed to invest may face the dual burden of investment losses and principal and interest repayments. If panic selling leads to further declines, the shock could spread in a chain reaction."
* This article has been translated by AI.
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