1-Year FX Swap Closes at -9.00 Won, Major Expirations Rise

On the 21st, foreign exchange (FX) swap points rose at major expirations. The 1-year swap closed at -9.00 won, up 0.40 won from the opening price. The 6-month swap rose by 0.40 won to -4.20 won, the 3-month swap increased by 0.30 won to -1.30 won, and the 1-month swap finished at -0.15 won, up 0.20 won. The ultra-short-term swaps remained in negative territory, with overnight (O/N) at -0.120 won and tom-next (T/N) at -0.035 won. Swap points indicate the difference between spot and forward exchange rates, and a movement towards less negative values is considered an increase. The main factor for the day was dollar supply, as institutions sold dollars in the spot market and bought them back in the futures market. A swap dealer from a bank reported that there is ample dollar liquidity, creating demand through sell-and-buy transactions. This trend is related to the long-term strength that has continued since mid-month, and the FX swap market reflects the relative conditions of won and dollar funding. Changes in interest rates and the dollar funding market can also impact the valuation of risk assets such as Bitcoin (BTC).

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