The foreign exchange (forex) volume traded by the South Korean banks touched a record high in 2021, with the average daily figure at $58.31 billion, according to the data published on Wednesday by the Bank of Korea.
The daily FX turnover for the year jumped by 10.3 percent when compared with the previous year’s $52.84 billion. The South Korean central bank started to record the forex market statistics in 2008, and the latest figure was the highest since then.
Spot forex average daily turnover last year in the country reached $22.71 billion, which is 11.6 percent higher than the previous year. FX derivatives demand also jumped by 9.4 percent to $35.59 billion.
Solid Demand
Forex trading volume usually spikes due to deepening volatility in a currency, but last year’s demand in the South Korean forex market mostly came from companies and investors.
Though many factors have contributed to the rise in forex trading , the increased demand from strong exports, imports and foreigners' investment in local financial markets were the key behind the yearly jump.
The demand for forex transactions jumped significantly last year as more and more South Korean businesses were importing and exporting services and goods. Further, the interest of foreign investors in South Korean stocks and bonds contributed to the rise of forex transactions.
Indeed, the country’s combined value of exports and imports in 2021 came in at $1.26 trillion. That was much higher than the previous year’s $980.1 billion. Furthermore, foreign investors bought $38.7 billion worth of local stocks and bonds, a figure that jumped 10-fold in a year.
