Korea Exchange: Large Increase In Trading Volume in US Dollar Futures In 2005

During the 1st quarter of 2005, average daily volume and open interest in US Dollar Futures hit the highest level since the opening of KRX.

Average daily volume in the 1st quarter of 2005 totaling 9,816 contracts is up 9.6% compared to the 2nd quarter of 2004 where the second highest level was reached (8,960 contracts).
In March 2005, average daily volume standing at 10,796 contracts and average daily open interest, at 101,816 contracts, both hit a historic high.

Wider Exchange Rate Fluctuation Driving up Trading Volume

Drastic movements of exchange rate caused by the market intervention by foreign exchange authorities in response to the recent plummeting of the US dollar account for the surge in trading volume.
Trading volume between February 22 and March 15, a period marked by wide intraday rate fluctuation, accounted for 41% of the total volume during the 1st quarter.

Hedge Trades by Banks, Investment Trust Firms and Other Financial Institutions on the Rise

Increased investment in overseas funds by financial institutions including banks and investment trust firms has driven up the participation in the futures market by these institutions seeking to hedge foreign exchange risk.
The share of global trading volume accounted for by banks is estimated at 36.2%, that by futures firms, 22.3%, investment trust companies, 14.2 %, and foreigners, 7.9%.
Given the steadily rising open interest, trading activities promise to continue their upturn into the future, for a good while.
Trades in US dollar futures consist chiefly of hedge transactions. Accordingly, turnover ratio (average daily volume/average daily open interest), an indicator for trend in short-term transactions, is on a steady decline.

(Turnover ratio)