South Korean banks’ daily foreign exchange volume rose to the highest level in four years in the first quarter as banks handled more deals to cope with robust trade, the central bank said Wednesday.

The daily foreign exchange trading volume among banks averaged $22.45 billion in the January-March period, up 7.8 percent from the preceding quarter, according to the Bank of Korea. It marked the largest daily turnover since the first quarter of 2008 when the trading volume hit $23.37 billion.

“The trading of FX spots has been on the rise mainly because the country’s trade continued to expand overall and companies took advantage of relatively stable foreign exchange rates in the cited period,” said an official at the BOK.

Daily transactions of foreign exchange spots gained 12.9 percent to $10.21 billion while FX swaps gained 4.1 percent to $10.61 billion, the latest data added.

Meanwhile, the volatility of the South Korean currency eased to the lowest level in over four years in the first quarter, on the back of solid economic fundamentals and the country’s ability to maintain its trade surplus.

The average daily volatility of the local currency reached 5 won in the first quarter, smaller than 9.3 won tallied in the fourth, according to the central bank. The reading marked the lowest since 3.8 won reported in the fourth quarter of 2007.

The Korean currency has relatively high volatility as the country’s foreign exchange markets have not grown enough to absorb external shocks and are exposed to excessive capital moving in and out of the country. Higher volatility is generally not good for traders because it raises uncertainties and risks.

In the first three months of this year, the Korean won gained 1.7 percent to the dollar, compared with the previous quarter, according to the central bank. 

(Yonhap News)