(MENAFN- Qatar News Agency) U.S. dollar-denominated savings by local residents in South korea increased at a record rate last month as people apparently expect the greenback to strengthen following what many see as an imminent U.S. rate hike, market observers said Monday.
As of the end of October, U.S. dollar deposits held by local residents came to US$49.45 billion, according to data released earlier by the Bank of Korea.
The October tally marks a 13.8 % increase from the previous month, the fastest on-month rise in the country's history, according to the central bank.
It also marks a 37.4 % spike from $36 billion at the end of last year. Local residents include individuals and private firms, excluding financial entities.
"U.S. dollar deposits have been growing steadily since the beginning of the year as many people see them as a good investment ahead of a U.S. rate hike," a local bank official said, asking not to be identified.
The U.S. Federal Reserve is widely expected to announce its first rate hike in nearly a decade at the upcoming meeting of the Federal Open Market Committee in December.
A higher U.S. interest rate, which usually makes the U.S. dollar stronger, is feared to prompt a mass outflow of foreign capital from developing countries, including South Korea.
An official from Woori Bank acknowledged the bank continues to advise its customers to invest in the U.S. dollar, noting they expect the won-dollar exchange rate to reach 1,250 won against the greenback.
The local currency was trading at 1,156.3 against the dollar as of 9:30 a.m. morning.
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