Bank Savings Shunned as Interest Rate Drops
More Koreans are looking to alternative investments as interest on traditional savings accounts diminishes, industry watchers said yesterday.
The Bank of Korea on Thursday cut the benchmark interest rate to a record low 2 percent as the economy contracts fast under the impact of a global crisis.
With banks' consequent reduction of interest on savings accounts, investors are looking to nonbanking financial institutions like credit cooperatives and mutual savings banks.
The central bank slashed the seven-day repurchase rate by half a percentage point, the sixth reduction in four months.
Deposits accumulated at all of regional units of the Agriculture Cooperatives increased to 162 trillion won ($115 billion) in January from 158 trillion won in December and 156 trillion won in November, reports said. Money deposited at units of the Fisheries Cooperatives also surged to 350 billion won from 57.1 billion won in November last year.
Those two deposit institutions have started to provide tax breaks on accounts that hold less than 300 million won this year, if investors pay a special 1.4 percent tax for rural development.
Gold also emerged as an attractive investment target in the age of low deposit interest rates as the price of gold in the world market is increasing.
Gold futures for April delivery rose $4.70, or 0.5 percent, to $949.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $954, the highest for a highly-active contract since July 22.
According to Shinhan Bank, the monthly average volume of gold traded using its derivatives was 3,681 kilograms in 2008 up from 963 kilograms in 2007. Trading totaled 2,916 kilograms in January.
Investors selling and buying gold through the bank's account are enjoying high earnings rates.
The average earnings of the product reached 18.07 percent for those who invested for a month and 57.17 percent for the last six months.
"We see substantial buying with people putting it in their backyards or their accounts as an alternative investment in times of banking crisis. Some expect that the price of gold will reach the $1,000 level soon," an official at the bank was quoted by Yonhap News as saying.
By Cho Chung-un
(source: http://www.koreaherald.co.kr)
The Bank of Korea on Thursday cut the benchmark interest rate to a record low 2 percent as the economy contracts fast under the impact of a global crisis.
With banks' consequent reduction of interest on savings accounts, investors are looking to nonbanking financial institutions like credit cooperatives and mutual savings banks.
The central bank slashed the seven-day repurchase rate by half a percentage point, the sixth reduction in four months.
Deposits accumulated at all of regional units of the Agriculture Cooperatives increased to 162 trillion won ($115 billion) in January from 158 trillion won in December and 156 trillion won in November, reports said. Money deposited at units of the Fisheries Cooperatives also surged to 350 billion won from 57.1 billion won in November last year.
Those two deposit institutions have started to provide tax breaks on accounts that hold less than 300 million won this year, if investors pay a special 1.4 percent tax for rural development.
Gold also emerged as an attractive investment target in the age of low deposit interest rates as the price of gold in the world market is increasing.
Gold futures for April delivery rose $4.70, or 0.5 percent, to $949.20 an ounce on the Comex division of the New York Mercantile Exchange. Earlier, the price reached $954, the highest for a highly-active contract since July 22.
According to Shinhan Bank, the monthly average volume of gold traded using its derivatives was 3,681 kilograms in 2008 up from 963 kilograms in 2007. Trading totaled 2,916 kilograms in January.
Investors selling and buying gold through the bank's account are enjoying high earnings rates.
The average earnings of the product reached 18.07 percent for those who invested for a month and 57.17 percent for the last six months.
"We see substantial buying with people putting it in their backyards or their accounts as an alternative investment in times of banking crisis. Some expect that the price of gold will reach the $1,000 level soon," an official at the bank was quoted by Yonhap News as saying.
By Cho Chung-un
(source: http://www.koreaherald.co.kr)
