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The Korea Futures Exchange Weekly Bulletin May 27 To May 31 2002-06-07

Date 07/06/2002

  • Following the previous week's upward trend, the KTB futures market exhibited its ongoing strength over the week.
  • Both in the KOFEX and the local USD/KRW F/X market, the KRW continued to show its extraordinary strength against the USD.
KOFEX Market Trend

KTB Futures Market

Following the previous week's upward trend, the KTB futures market exhibited its ongoing strength over the week.

Initially, the lead month contract KTB206 inched down slightly without any major factors that could give an effect to the bond futures market. In addition, the trading volume in the KTB futures market marked merely 16,864 contracts, the lowest level this year on Tuesday. At that time, the KTB206 moved within a range of fluctuation of only 7 ticks.

However, toward the end of the week, the June KTB futures contract reversed upward increasing as much as 72 ticks from Wednesday to Friday. So that, it closed the week at 104.67, up 67 ticks from the previous week.

The major reasons for the continued strength of the KTB futures market are as follows:

  • Concern over the lingering uncertainty surrounding the US economy
    • During the week, both the DJIA and NASDAQ Comp. Index plunged by 1.77 and 2.75 percent to reach at 9,925.25 and 1615.73 points respectively.
  • Ongoing appreciation of KRW against the Green back
  • Announcement by government that the Treasury bond auction in June would be small.
The average daily volume in the KTB futures market posted 40,195 contracts, down 18.5 percent compared to the previous week.

USD/KRW Currency Futures Market

How long can the KRW enjoy its strength against the Green back? During the week, both in the KOFEX and the local USD/KRW F/X market, the KRW continued to show its extraordinary strength against the USD.

At the KOFEX F/X futures market, the lead month USD/KRW futures contract, the USD206 decreased by KRW 17.1 or 1.3 percent closing the week at KRW 1,228.0. Meanwhile, the USD/KRW rate in the local F/X market also plunged by KRW 16.7 or 1.3 percent closing the week at KRW 1,226.3.

The major reasons behind the continued freefall of the KRW are as follows:

  • Increasing inflow of the USD into the market by exporters who have stored them up in preparing for the unstable foreign exchange
  • Comment by the governor of the Bank of Korea that he was not worried about recent Won appreciation on Wednesday