Q3 Daily Average Forex Trading Drops to $5.05 Billion Due to "Impact of Export-Import Decline"

An employee is organizing dollars at the Counterfeit Response Center of Hana Bank Headquarters in Jung-gu, Seoul.
[Photo by Yonhap News]

In the third quarter of this year, the average daily foreign exchange transactions of foreign exchange banks sharply decreased by more than 5 billion dollars compared to the previous quarter.

According to the "Foreign Exchange Transactions Trends of Foreign Exchange Banks" announced by the Bank of Korea on the 31st, the average daily foreign exchange transactions (spot exchange and foreign exchange derivatives transactions) of foreign exchange banks in the third quarter amounted to 64.32 billion dollars, down 5.05 billion dollars (-7.3%) from the previous quarter.

The Bank of Korea explained that the decrease in foreign exchange transactions was influenced by seasonal factors during the summer vacation period, reduced exchange rate volatility, and a decline in export and import volumes.

According to the Bank of Korea, foreign exchange transaction volumes typically tend to decrease in August, the summer vacation season. Looking at the average foreign exchange transaction volumes over the past 10 years, the third quarter transaction volume decreased by 3.4% compared to the second quarter.

Looking specifically at third-quarter foreign exchange transactions by product, spot exchange transaction volume was 24.13 billion dollars, down 4.34 billion dollars (-15.2%). Foreign exchange derivatives transaction volume was 40.19 billion dollars, down 710 million dollars (-1.7%).

By bank type, domestic banks recorded transaction volumes of 30.52 billion dollars, down 1.05 billion dollars (-3.3%), while foreign bank branches recorded 33.8 billion dollars, down 4 billion dollars (-10.6%) from the previous quarter.

In the case of spot exchange transactions, by currency, won-dollar transactions (18 billion dollars) decreased by 1.9 billion dollars (-9.6%). Also, domestic banks' transactions (14.11 billion dollars) decreased by 1.67 billion dollars (-10.6%), and foreign bank branches' transactions (10.01 billion dollars) sharply decreased by 2.67 billion dollars (-21.1%).

For foreign exchange derivatives transactions, forward exchange transactions (12.62 billion dollars) slightly increased by 20 million dollars (0.1%) compared to the previous quarter, mainly due to NDF transactions with non-residents, while foreign exchange swap transactions (26.36 billion dollars) decreased by 610 million dollars (-2.3%), mainly due to interbank transactions among foreign exchange banks (-660 million dollars).