South Korea's average daily foreign exchange trading volume set a new all-time record in the second quarter of this year, driven by a surge in foreign securities investment and growing demand for currency hedging.
The Bank of Korea said Friday that average daily forex trading — covering both spot transactions and foreign exchange derivatives — reached $121.44 billion in the second quarter, the highest quarterly figure since the central bank began tracking the data in 2008. The result marks an 18.3 percent increase from the previous record of $102.65 billion set in the first quarter.
The Bank of Korea attributed the increase to a rise in foreign investors' domestic securities trading and sustained hedging demand stemming from continued won-dollar exchange rate volatility.
According to the Financial Supervisory Service, the value of foreign investors' domestic securities transactions jumped to 1,048 trillion won in just April and May alone, up from 475 trillion won ($330 billion) in the fourth quarter of last year and 855 trillion won in the first quarter of this year.
The daily won-dollar exchange rate fluctuation rate stood at 0.37 percent in the fourth quarter of last year, 0.60 percent in the first quarter of this year and 0.52 percent in the second quarter.
By product type, average daily spot transaction volume rose 27.7 percent from the previous quarter to $54.11 billion, while foreign exchange derivatives volume climbed 11.7 percent to $67.32 billion.
By institution, domestic banks' forex trading volume grew 20.1 percent quarter-on-quarter to $55.51 billion, while foreign bank branches posted a 16.8 percent increase to $65.93 billion.
kimstar@heraldcorp.com
