South Korea's Foreign Exchange Trading Expands USD5.62B
Daily average turnover in the domestic inter-bank market for foreign currencies and derivatives climbed $5.62 billion from the prior quarter to $45.43 billion between January and March, according to figures released by the Bank of Korea (BOK).
The uptick was underpinned primarily by heightened demand for the US dollar, whose daily average trading volume rose by $2.05 billion over the period. Transactions involving the Chinese yuan also picked up, adding $0.80 billion on a daily average basis during the quarter.
Derivative activity intensified alongside spot trading. Demand for foreign exchange swaps climbed $2.07 billion to reach $21.33 billion, while transactions in other derivative instruments — including currency swaps and options — rose $0.36 billion to $3.03 billion.
Currency volatility also gathered pace, with the daily average fluctuation in the South Korean won against the US dollar accelerating to 0.76% in March, up from 0.58% recorded in February.
The won weakened considerably over the same stretch, with the exchange rate depreciating sharply to 1,530.1 won per dollar by the end of March, compared with 1,439.7 won per dollar at the close of February — a move that underscored growing pressure on the domestic currency.
Sovereign credit risk indicators tracked a similar trajectory. The premium on the credit default swap for South Korea's five-year government bonds averaged 30 basis points in March, a notable rise from 22 basis points the previous month, signaling heightened investor caution toward the country's debt outlook.
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