Historic High in Forex Transactions

In an unprecedented surge, the daily foreign exchange transactions of foreign exchange banks soared to a record $68.96 billion in 2024, marking a significant milestone since the statistical revision in 2008. This represents an increase of $3.01 billion from the previous year, underscoring the dynamic growth in the forex market.

Driving Forces Behind the Surge

The remarkable growth was primarily fueled by a spike in derivative transactions, driven by the need for hedging against high exchange rates. "The escalation in exchange rates has heightened hedging demand, and the expansion of the foreign exchange market in the latter half of the year has also played a crucial role," explained the Bank of Korea.

Overseas Investments and Trade Contributions

Domestic investors' overseas ventures saw a dramatic rise, with foreign currency securities settlements nearly doubling to $645.9 billion. Furthermore, the increase in export and import volumes to $1.3158 trillion from $1.2748 trillion the previous year has significantly contributed to this upward trend.

Exchange Rate Impact

The average won-dollar exchange rate climbed to 1,364.4 won, up by 58.5 won from 2023. This uptick has notably influenced the volume of foreign exchange derivatives transactions, which grew by $3.14 billion to $43.29 billion. Forward transactions, especially non-deliverable forward (NDF) transactions, and foreign exchange swap transactions with non-residents, have seen substantial increases, highlighting the market's robust activity.