In the second quarter of this year (April to June), the average daily foreign exchange transaction volume of foreign exchange banks exceeded $82.1 billion, setting a record high for the second consecutive quarter. This was a result of increased volatility in the won-dollar exchange rate and a rise in foreign investment in domestic securities.
According to the Bank of Korea's report on the 'Foreign Exchange Bank Transaction Trends' released on the 29th, the average daily transaction volume of foreign exchange transactions, including spot exchanges and foreign exchange derivative transactions, in the second quarter was $82.16 billion, reflecting a 12.9% ($9.4 billion) increase from the previous quarter ($72.76 billion). This is the highest level since statistical revisions in 2008, with the previous maximum being in the first quarter.
A Bank of Korea official noted, 'Since the extension of foreign exchange market trading hours in July last year, transaction volume has steadily increased, coupled with heightened volatility in the won-dollar exchange rate and an increase in foreign investment in domestic securities.'
According to the Bank of Korea, the average daily won-dollar exchange rate fell from 1,453 won in the first quarter to 1,401 won in the second quarter, due to the strengthening of Asian currencies and expectations for policies from the new domestic government. Meanwhile, the volatility increased from 0.36% in the first quarter to 0.61% in the second quarter, and the buying and selling volume of foreign investment in domestic securities rose from an average of 223 trillion won in the first quarter to 238 trillion won in the second quarter.
By product, the volume of spot exchange transactions was recorded at $32.77 billion, an increase of 17.3% ($4.82 billion) from the previous quarter. During the same period, foreign exchange derivative transactions also rose by 10.2% ($4.58 billion) to reach $49.39 billion.
The average daily transaction volume for foreign exchange derivatives was recorded at $49.39 billion, a 10.2% ($4.58 billion) increase compared to the previous quarter. Of this, the futures exchange transactions amounted to $15.39 billion, and the foreign exchange swap transactions totaled $32.29 billion. Futures transactions, primarily consisting of non-deliverable forward (NDF) transactions ($1.67 billion), increased by 14.8%, while foreign exchange swap transactions rose by 7.9% from the previous quarter.
When dividing the total volume of spot exchange and foreign exchange derivative transactions by bank, domestic banks accounted for $37.27 billion, while foreign bank branches recorded $44.89 billion. Compared to the previous quarter, domestic banks increased by 14.5% ($4.73 billion), and foreign bank branches rose by 11.6% ($4.67 billion).