Q3 Foreign Exchange Trading Hits Record High... Exchange Rate Volatility Down, Growth Slows

Bank of Korea Releases "Trends in Foreign Exchange Transactions of Foreign Exchange Banks in Q3"
Average Daily FX Trading Volume Reaches $82.84 Billion, Up 0.8%

In the third quarter of this year, the average daily foreign exchange trading volume in South Korea once again reached a record high for a single quarter. However, the scale of the increase was smaller than in the previous quarter, as trading in foreign exchange derivatives declined due to factors such as reduced exchange rate volatility.

An employee is holding up US dollars at the Counterfeit Response Center of KEB Hana Bank in Myeongdong, Seoul. Photo by Yonhap News Agency

According to the "Trends in Foreign Exchange Transactions of Foreign Exchange Banks in the Third Quarter of 2025," released by the Bank of Korea on October 27, the average daily foreign exchange trading volume (including spot and derivatives transactions) by foreign exchange banks in the third quarter of this year was $82.84 billion. This represents an increase of $680 million (0.8%) compared to the previous quarter's $82.16 billion. Following the second quarter, this figure once again set a new record for the largest quarterly volume since the statistical revision in 2008.

However, the scale of the increase was smaller than the previous quarter's $9.4 billion. While the extension of foreign exchange market trading hours since July last year has continued to drive growth in spot transactions, trading in foreign exchange derivatives has declined due to factors such as reduced exchange rate volatility. The won-dollar exchange rate volatility averaged 0.35% per day in the third quarter, down from 0.61% in the second quarter. The average daily won-dollar exchange rate in the third quarter was 1,386 won, a decrease from 1,401 won in the second quarter. The monthly average trading volume of domestic securities by foreign investors increased. In the third quarter (July-August), the monthly average trading volume of listed domestic stocks and bonds by foreign investors was 351 trillion won, up from 285 trillion won in the previous quarter, reflecting a scaling up.

By product in the third quarter, spot transactions amounted to $34.86 billion, an increase of $2.09 billion (6.4%) from the previous quarter. However, foreign exchange derivatives transactions totaled $47.98 billion, a decrease of $1.41 billion (-2.9%) from the previous quarter. By bank type, domestic banks recorded a trading volume of $39.49 billion, up $2.22 billion (6.0%) from the previous quarter, while foreign bank branches, which have a high proportion of derivatives transactions, saw their trading volume decrease by $1.54 billion (-3.4%) to $43.35 billion.

The average daily trading volume of foreign exchange derivatives was $47.98 billion, a decrease of $1.41 billion (-2.9%) from the previous quarter. Forward transactions ($13.94 billion) decreased by $1.45 billion (-9.4%) from the previous quarter, mainly due to a decline of $1.17 billion in non-deliverable forward (NDF) transactions. Foreign exchange swap transactions ($32.51 billion) increased by $220 million (0.7%) from the previous quarter, as interbank transactions among foreign exchange banks ($110 million) and transactions with non-residents ($230 million) both rose.