By Jhoo Dong-chan
Local investors are rushing to financial products investing in U.S. dollars amid the continuing fall of the Korean won against the greenback.
The nation's dollar time deposit accounts attracted over $100 million worth of investment over the past week.
A dollar time deposit is an interest-bearing bank account deposited in dollars with a specified period of maturity. A customer is allowed to make deposits either in won or dollars.
If a customer makes a deposit in won, the account changes the amount into dollars automatically under current exchange rates. The customer could either sustain a loss or make a profit based on fluctuations in the won-dollar exchange rate.
According to data from domestic banks, dollar time deposits in five commercial lenders _ Shinhan, KB Kookmin, Woori, KEB Hana and NH NongHyup Bank _ totaled $12.95 billion as of May 8, up over $100 million from its end-April figure of $12.86 billion. The end-April figure was also up $270 million from the previous month.
This investment trend came as a result of the rapid rise of the won-dollar exchange rate since March.
According to KEB Hana Bank, the rate closed at 1,188.5 won on the Tuesday session, up 1 won, or 0.08 percent, from the previous session.
"It could rise further," Shinhan Bank FX researcher Baek Seok-hyeonsaid. "An increasing number of market analysts are now saying the won-dollar exchange rate couldclimb above the 1,200 won level. It's probable."
KB Securities Research Center said, however, the uptrend in the won-dollar exchange rate is unlikely to continue throughout the year.
"Research centers at the nation's top eight securities firms said in their recent reports that the rate is expected to turn downward after the second quarter of the year," it said.
Highlighting investors' growing interest in dollars, not only commercial banks but also securities firms are introducing a series of financial products investing in dollars.
Shinhan Investment said Monday it will sell its Dollar RP product guaranteeing a 3 percent annual interest rate until June 14.
"More investors are showing interest in investing in dollars because of the growing won-dollar exchange rate," Shinhan Investment FICC head Oh Hae-Youngsaid.