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2026-07-14 11:58:10
【Offshore trading volume of Korean won NDF hits a quarterly high, triggering exchange rate volatility and speculation concerns】 (1) The Bank of Korea pointed out in its report "International Financial and Foreign Exchange Market Trends" that offshore forward foreign exchange trading is one of the reasons for the rise in the Korean won exchange rate. In the second quarter, the average daily trading volume of NDF contracts participated by foreign investors reached US$22.77 billion, an increase of US$3.87 billion from the previous quarter, setting a new quarterly high since statistics began in 2018, accounting for 76% of the total trading volume of local currency exchange rate hedging products (US$30 billion) during the same period. (2) NDF is an offshore forward contract traded in the overseas market, used to hedge the risk of the US dollar/Korean won exchange rate. Market opinion believes that the exchange rate and trading volume in the offshore market at night will affect the Korean domestic market the next day, forming a "tail wagging the dog" phenomenon (the secondary market affects the primary market). (3) In addition, due to the relatively loose regulation of the offshore market, the market is worried that it is more vulnerable to the impact of speculative forces, further aggravating exchange rate volatility.
