1Q Foreign Exchange Trading Approaches $60 Billion Daily Average... Largest Since 2008

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] In the first quarter, the scale of foreign exchange transactions by foreign exchange banks approached $60 billion per day, marking an all-time high. This was due to increased volatility in the financial markets caused by the spread of the novel coronavirus disease (COVID-19).

According to the "Foreign Exchange Transaction Trends of Foreign Exchange Banks in the First Quarter of 2020" announced by the Bank of Korea on the 23rd, the average daily foreign exchange transaction volume was $59.37 billion, an increase of $4.99 billion (9.2%) from the previous quarter ($54.38 billion). This is the highest level since statistics began in 2008.

The Bank of Korea explained, "Foreign exchange transactions increased due to expanded exchange rate volatility caused by COVID-19, foreign currency funding by domestic securities firms, and outflows of foreign stock funds." As global stock prices plummeted, foreign currency funding increased due to margin calls for stock-linked derivatives (ELS) by domestic securities firms.

By product, spot foreign exchange transaction volume was $21.11 billion, up $1.68 billion (8.7%) from the previous quarter. Foreign exchange derivatives transaction volume was $38.26 billion, an increase of $3.3 billion (9.4%) from the previous quarter. The average daily transaction volume of foreign exchange derivatives also reached the highest level since statistics began.

By bank, domestic banks' transaction volume was $26.08 billion, up $150 million (0.6%) from the previous quarter, while foreign bank branches' transaction volume was $33.29 billion, an increase of $4.84 billion (17%) from the previous quarter.

This content was produced with the assistance of AI translation services.