SEOUL: Daily foreign-exchange forwards trading in South Korea hit the largest in seven years as FX hedging demand increased amid rising volatility in the foreign exchange market, central bank data showed Thursday.
The daily FX transactions averaged 49.38 billion U.S. dollars in the third quarter, down 0.7 percent from the prior quarter, according to the Bank of Korea (BOK).
FX trading on spots declined 9.7 percent due to a reduction in trade caused by economic slowdown in emerging countries, but FX derivatives transactions advanced 6.3 percent on a rise in FX volatility.
In particular, the daily average transactions of FX forwards surged 23.2 percent from three months earlier to 9.23 billion dollars during the July-September period.
It marked the largest since the third quarter of 2008 when the global financial crisis increased FX volatility and, in turn raised demand for FX hedging.
The daily trading of non-deliverable forward (NDF) amounted to 7.74 billion dollars in the third quarter, up 29.4 percent from the previous quarter.
The growth came as risk aversion got stronger amid expectations for the U.S. rate hike and concerns about slump in emerging economies.
