SEOUL, Feb. 6 -- Yuan deposits in South Korea fell to a six-month low as incentives for arbitrage trading reduced on narrow difference between interest rates of South Korea and China, central bank data showed Friday.

Outstanding yuan deposits by local residents were 18.73 billion U.S. dollars as of end-January, down 0.64 billion dollars from a month earlier, according to the Bank of Korea (BOK). It was the lowest since July last year.

Yuan deposits surged from 1.64 billion dollars in October 2013 to 21.7 billion dollars in October 2014, but those declined from November.

Local financial institutions deposited funds in local branches of Chinese banks, which offered higher deposit rates than South Korean banks, but the rate difference narrowed down to nearly zero.

The U.S. dollar deposits rose 2.27 billion dollars from a month earlier to 38.27 billion dollars at the end of January as exporters deposited export proceeds into bank accounts.

As of end-January, deposits denominated in the Japanese yen and the euro stood at 2.48 billion dollars and 2.26 billion dollars each, up 0.11 billion dollars and 0.14 billion dollars respectively.