Banks see daily forex trading surge to 4-year high

Daily foreign exchange trading volume at local banks rose to its highest level in more than four years in the second quarter amid a continued current account surplus, the central bank said yesterday.

The daily foreign exchange trading volume among banks averaged $22.72 billion in the April-June period, up 1.2 percent from three months earlier, according to the Bank of Korea. The reading marked the highest level since $23.37 billion in the first quarter of 2008.

Daily transactions of foreign exchange spots fell 2.1 percent on-quarter to $10 billion while FX swaps gained 6.2 percent to $11.27 billion, according to the central bank.

Korea posted a current account surplus of $3.61 billion in May, marking the fourth straight month of the surplus.

Meanwhile, the volatility of the Korean currency eased in the second quarter despite global economic uncertainties.

The average daily volatility of the local currency reached 4.6 won ($0.004) in the April-June period, narrower than 5 won in the first quarter. The second-quarter number marked the lowest since 3.8 won in the fourth quarter of 2007.

The Korean currency has relatively high volatility as the country’s foreign exchange markets have not grown enough to absorb external shocks and are exposed to excessive capital moving in and out of the country.

In the second quarter, the Korean won fell 1.1 percent against the greenback, compared with three months earlier.

Yonhap