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S. Korea's inter-bank FX turnover rises 3.2 pct in Q3

All Headlines 12:00 October 18, 2011

SEOUL, Oct. 18 (Yonhap) -- South Korean banks' daily foreign exchange trading volume rose to the highest level in more than three years in the third quarter amid a continued current account surplus, the central bank said Tuesday.

The daily foreign exchange trading volume among banks averaged US$22.16 billion in the July-September period, up 3.2 percent from the previous quarter, according to the Bank of Korea (BOK). The reading marked the highest level since $23.37 billion in the first quarter of 2008.

"The on-quarter increase came mostly on the back of a sustained current account surplus. The slight gain in FX volatility also drove up the trading volume," said a BOK official.

Daily transactions of foreign exchange spots climbed 4.6 percent to $9.68 billion while FX swaps increased 2.6 percent to $10.63 billion, according to the central bank.

Meanwhile, the volatility of the South Korean currency rebounded due to global economic uncertainties.

"The increased volatility mainly stems from Europe's sovereign debt problem, the credit downgrade of the United States and growth concerns in advanced economies, which led to a volatile global financial market," the BOK said.

The average daily volatility of the local currency reached 8.2 won in the third quarter, growing from 5.2 won three months ago. The second-quarter reading had marked the lowest since 3.8 won 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.

In the third quarter, the Korean won tumbled 9.4 percent against the greenback, compared with three months earlier.


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