In the second quarter of this year, increased exchange rate volatility led to a record average daily foreign exchange trading volume.
According to the Bank of Korea's report on foreign exchange trading trends for the second quarter, the average daily trading volume (spot and foreign exchange derivatives) reached $121.44 billion, an increase of $18.79 billion (18.3%) from the previous quarter. This marks the highest level since statistics began being compiled in 2008.
The Bank of Korea attributed this surge to increased foreign investment in domestic securities and ongoing demand for hedging due to exchange rate volatility. The trading volume of foreign investors in domestic securities rose from 475 trillion won in the fourth quarter of last year to 855 trillion won in the first quarter of this year, reaching 1,048 trillion won in just April and May.
The volatility of the won-dollar exchange rate also remained high, increasing from 0.37% in the fourth quarter of last year to 0.60% in the first quarter and 0.52% in the second quarter of this year.
By product, the average daily spot trading volume increased by 27.7% to $54.11 billion. Among these, won-dollar transactions rose by 31.4% from the previous quarter, totaling $43.74 billion.
In terms of counterparties for spot trading, interbank transactions amounted to $25.76 billion, while transactions with non-residents reached $17.76 billion, reflecting increases of 23.6% and 41.1%, respectively. Transactions with domestic customers also rose by 18.3% to $10.51 billion.
The trading volume of foreign exchange derivatives increased by 11.7% to $67.32 billion, with forward transactions amounting to $23.03 billion, primarily driven by non-deliverable forward (NDF) trading, which rose by 21.6% from the previous quarter.
By bank, domestic banks recorded a foreign exchange trading volume of $55.51 billion, while foreign bank branches reported a volume of $65.93 billion, reflecting increases of 20.1% and 16.8%, respectively.
* This article has been translated by AI.
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