In the first quarter of this year, the average daily foreign exchange transaction amount at foreign exchange banks exceeded $72.7 billion, setting a record high.
According to the 'Foreign Exchange Transaction Trends of Foreign Exchange Banks' released by the Bank of Korea on the 25th, the average daily amount of foreign exchange transactions, including spot transactions and foreign exchange derivatives, at foreign exchange banks in the first quarter of this year was $72.76 billion, a 7.4% increase (+$5.02 billion) compared to the previous quarter ($67.73 billion). This is the highest level since the statistical revision in 2008 for a quarterly basis.
The Bank of Korea noted that this is attributed to seasonal factors, foreign investment in domestic securities, and the demand for hedging against exchange rate risks due to the rise in exchange rates. Typically, foreign exchange transactions tend to decrease in the fourth quarter due to year-end financial statement management and increase in the first quarter, and the rise in the won-U.S. dollar exchange rate means an increase in dollar selling.
The volume of spot transactions increased by $2.834 billion (+9.0%) to $27.94 billion compared to the previous quarter. The won-U.S. dollar transactions accounted for the majority, increasing by 4.4% (+$860 million) to $20.35 billion. Transactions in won against other currencies were up 21.1% (+$700 million) to $4.02 billion.
The scale of foreign exchange derivative transactions increased by $2.73 billion (+6.5%) to $44.81 billion during the same period. Among these, the volume of forward transactions was $13.41 billion, and the volume of foreign exchange swap transactions was $29.93 billion. Forward transactions primarily increased around NDF transactions, while foreign exchange swap transactions rose mainly among domestic customers and non-residents.
When breaking down the total volume of spot and foreign exchange derivative transactions by bank, domestic banks accounted for $32.54 billion, while foreign bank branches recorded $40.22 billion. Compared to the previous quarter, domestic banks increased by $1.49 billion (+4.8%), and foreign bank branches increased by $3.53 billion (+9.6%).