Q2 Foreign Exchange Transactions Hit Another Record High... "Increase in Foreigners' Domestic Securities Investment"

[Image source=Yonhap News]

In the second quarter of this year, foreign exchange transactions by foreign exchange banks recorded the highest quarterly level ever.

According to the "Foreign Exchange Transactions Trends of Foreign Exchange Banks" announced by the Bank of Korea on the 26th, the average daily foreign exchange transactions (spot exchange and foreign exchange derivatives transactions) amounted to $69.37 billion in the second quarter, a 3.8% increase compared to the previous quarter ($66.83 billion).

This is the highest level since the statistics compilation began in 2008. The previous quarterly record set in the first quarter was surpassed within just one quarter.

With an increase in foreign investors' domestic securities investment and reduced volatility in the won-dollar exchange rate, the foreign exchange market has stabilized compared to last year, leading to growth mainly in interbank transactions rather than foreign exchange transactions by domestic customers or non-residents.

By product, the spot exchange transaction volume increased by 7.6% from the previous quarter to $28.47 billion, while foreign exchange derivatives transactions rose by 1.3% to $40.9 billion.

By bank type, domestic banks' transaction volume increased by 8.6% to $31.57 billion, and foreign bank branches' transaction volume rose by 0.1% to $37.79 billion.

Looking specifically at spot exchange transactions, won-dollar transactions ($19.9 billion) increased by 5.3%. By bank, domestic banks' transactions ($15.78 billion) increased by 10.4%, and foreign bank branches' transactions ($12.69 billion) rose by 4.4%.

Foreign exchange derivatives transactions saw forward exchange transactions ($12.6 billion) decrease by 5.7% compared to the previous quarter, mainly due to NDF transactions with non-residents. On the other hand, foreign exchange swap transactions ($26.96 billion) increased by 5.2%, driven by interbank transactions among foreign exchange banks and transactions with non-residents.