South Korean banks saw their short-term time deposits jump more than 10 percent on-quarter in the third quarter amid expectations of interest rate hikes down the road, central bank data showed Tuesday.
The outstanding balance of short-term time deposits at local lenders came to 221.6 trillion won ($202 billion) as of the end of September, up 19.4 trillion won from three months earlier, according to the data from the Bank of Korea.
It was up 10.1 percent from the second quarter, the largest quarterly increase since the second quarter of 2010 and 9.8 percent from a year earlier.
(Yonhap)
In the second quarter, short-term time deposits rose around 8 trillion won, with the outstanding balance ranging from 170 trillion won to 180 trillion won from January to May.
Market watchers ascribed the surge in short-term time deposits to expectations of an interest rate increase by the BOK this month.
"Given recent signals from the monetary authorities, it would be strange for the BOK not to jack up the key rate this month," an expert said. "People tend to increase short-term deposits in order to shift their money easily to benefit from a rate hike."
Experts said the BOK chief started to send a hawkish signal in a speech to mark the central bank's 67th anniversary in June by saying it would be necessary to adjust the extent of monetary softening if marked signs of an economic recovery show up.
The central bank is tipped to raise the benchmark rate by a quarter percentage point to 1.5 percent in its policy meeting slated for Nov. 30. Last month, the BOK froze the base rate at 1.25 percent for the 16th consecutive month, after Asia's fourth-largest economy posted its fastest growth in seven years in the third quarter.
Buoyed by resilient exports, the nation's gross domestic product rose 1.4 percent on-quarter in the July-September period or by 3.6 percent compared with the previous year. (Yonhap)
