There is a school of thought among FX industry leaders that all eyes should look East when considering the future of the FX industry. It has been widely acknowledged among FX firms for some time now that China, Indonesia, Hong Kong and Singapore represent vast opportunities for ongoing institutional and retail order flow for today’s post-financial crisis Western companies.
Indeed, the majority of firms now have well-established distribution and acquisition channels from the Far East, and are generating much-required volume from it. There is, however, relatively uncharted territory which quite clearly can be considered to be on its way toward becoming an important strategic target area – South Korea.
Foreign currency deposits within Korean banks have reached a new record high last month, at a time when trading volatility has, according to one particular esteemed industry expert, experienced its lowest point in 20 years. Even more importantly, this record has usurped a previous high mark set just two months earlier.
Certainly, there has been much interest in expanding Korean liquidity to within the reach of overseas exchanges, as Moscow Exchange’s signing of a co-operation agreement with Korea’s KRX Exchange last month served to demonstrate.
On the retail side of the business, LeapRate reported recently that there had been a vast surge in trading via mobile devices recently.
According to a news report by Korean news source Arirang, The Bank of Korea said today that outstanding foreign currency-denominated deposits stood at $58.4 billion as of the end of April, up $7.3 billion from the previous month, with corporate deposits having accounted for about 90 percent of the total.
Dollar-dominated and yuan-dominated deposits both rose on-month, and officials at the central bank expect the trend to continue over the coming months as exporters put their dollars into deposits.
LeapRate spoke to Gabriel Styllas, CEO at Cyprus-based Prime Brokerage TopFX, which provides liquidity to a great number of Western FX firms which have successfully garnered business from the Asia-Pacific region: “Over the past several months we have been monitoring the increase in this trend” stated Mr. Styllas.
“If you are involved seriously in FX you have to continuously monitor trends like this as it can help you in making more informed decisions. We have already had consistently high volumes within this region. From our analysis, we believe that this is only going to go in one direction” he concluded.