Forex Fluctuation Range Hits Lowest in 3 Years

The range of fluctuations in South Korea's currency won to U.S. dollar exchange rate fell to the lowest level in three years and three months in the first quarter (Q1) of this year.

Decreased fluctuations mean not only that the Seoul foreign exchange (forex) market has been stabilized, but also that investors didn't make investments actively as the foreign exchange rates were unpredictable.

In 'Foreign Exchange Market Trends in Q1 2011' released by the Bank of Korea (BOK) on Thursday, the fluctuation range of the won to dollar exchange rates posted 5.9 won in Q1, the lowest level in three years and three months since Q4 2007. On the daily basis, the fluctuation range recorded 4.6 won, lower than 5.1 won in Q3 2010. In daily comparison, the fluctuation rate posted 0.41%, also marking the lowest level in six months since 0.43% in Q3 2010.

The fluctuation level of the Korean won turns out be to higher than the Singaporean dollar (0.22%), the Thai Baht (0.23%) and the Brazilian Real (0.32%), but lower than the Japanese yen (0.49%), the euro (0.50%) and the Australian dollar (0.53%).

The BOK found that the falls in both fluctuation range and rate in Q1 exchange rates are ascribable to geopolitical risks. According to its analysis, other than North Korea's shelling attack on Yeonpyeong Island in last November, there was no attentive geopolitical risk on the Korean peninsula this year, leading to decreased fluctuations in exchange rates.

The volume of foreign currency trades recorded $20.59 billion in Q1, exceeding $20 billion for the first time since Q3 2009.

[Written by Su-hyun Song / edited by Soyoung Chung] [ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]