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Seasonal factors and heightened exchange-rate volatility pushed South Korea’s average daily foreign-exchange trading above $100 billion in the first quarter, the largest level on record.
The Bank of Korea said Tuesday that average daily FX trading by foreign-exchange banks — including spot transactions and FX derivatives — totaled $102.65 billion in the first quarter of 2026. That was up $18.03 billion, or 21.3%, from the previous quarter’s $84.62 billion, the highest since the statistics were revised in 2008.
A BOK official said trading rose due to seasonal factors, increased foreign investors’ trading in domestic securities, and greater demand for hedging against currency risk as volatility widened.
Trading typically slows in the fourth quarter because of year-end book closing and then picks up in the first quarter. Foreign investors’ trading in South Korean securities surged to a monthly average of 855 trillion won in the first quarter from 475 trillion won in the fourth quarter of last year.
As volatility increased, both spot and derivatives trading rose. The exchange rate showed high volatility due to the U.S.-Iran war. The won-dollar exchange-rate fluctuation widened to 0.60% in the first quarter from 0.37% in the fourth quarter of last year.
By product, average daily spot FX trading came to $42.39 billion, up $8.8 billion, or 26.2%, from the previous quarter.
Average daily FX derivatives trading was $60.27 billion, up $9.23 billion, or 18.1%. Average daily forward trading increased $3.65 billion, or 23.9%, to $18.94 billion, led by non-deliverable forward, or NDF, transactions. NDF trading rose $3.38 billion to $15.55 billion.
The BOK said the increase reflected more forward and FX swap transactions, mainly by companies and institutional investors, seeking to lock in future prices to reduce uncertainty from exchange-rate swings.
An NDF is a type of forward contract in which only the difference between the agreed exchange rate and the spot rate at maturity is settled. It is often used by foreign investors for currency hedging.
* This article has been translated by AI.
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