Inter-bank FX swap turnover hits record high in 2008

SEOUL, Jan. 28 (Yonhap) -- The daily turnover of foreign exchange swaps between
South Korean banks hit an all-time high in 2008 as local lenders actively engaged
in swap trading to deal with dollar shortages, the central bank said Wednesday.

The daily trading volume of foreign exchange swaps averaged US$9.23 billion in
2008, up 37.7 percent from the previous year, according to the Bank of Korea
(BOK). The turnover was the largest since the foreign exchange swap market opened
in 1996.
Hit by the U.S.-sparked global financial meltdown, local banks with high levels
of overseas debt have been suffering from dollar shortages.
"The trading of foreign exchange swaps jumped last year as local banks were
aggressively engaged in swap transactions to secure dollar liquidity," an
official at the BOK said. South Korea's currency swap deals with the U.S. also
contributed to a jump in turnover, he added.
On Oct. 30, the BOK announced a $30 billion currency swap agreement with the U.S.
Federal Reserve, and has tapped $16.35 billion from the swap line so far. The
local currency fell 25.7 percent against the U.S. dollar last year, becoming one
of the world's worst-performing currencies.
Meanwhile, the daily trading volume of foreign exchange among banks averaged
$23.1 billion last year, up 17.2 percent from a year ago, the BOK said.
Daily transactions of spot exchange, however, fell 5.3 percent on-year to $7.81
billion in 2008 amid unstable fluctuation in the won-dollar exchange rate.
The daily fluctuation of the won-dollar exchange rate reached 18.3 won last year,
marking the highest volatility since 1998 when the figure was 23.9 won, the BOK
added.
In the fourth quarter of 2008, average volatility of the local currency reached a
whopping 45.2 won, the highest since 48.3 won recorded in the first quarter of
1998.
sooyeon@yna.co.kr
(END)