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Young Kyu Kim, head of foreign exchange and derivatives sales at Hana Bank, discusses Asia’s foreign exchange management through 2025 amid escalating tensions between the United States and China.
Global Finance: While geopolitics is arguably the number one concern for businesses in the US and Europe, what is currently keeping Asian businesses up at night when it comes to foreign exchange markets?
Young Kyu Kim: Geopolitics is also a growing concern for Asian businesses. The foreign exchange market is impacted by the war in the Middle East and the possible escalation of tensions between the United States and China following Trump’s victory, which creates as much volatility as economic conditions and interest rate differentials. interest between countries.
In line with the Korean foreign exchange authorities’ structural improvement policy, which prepares global companies’ investments in Korea, Hana Bank opened Hana Infinity Seoul, a 24-hour trading floor. Starting with the new center from Seoul, Hana Infinity London was opened to meet the KRW FX trading needs of non-residents. There are plans to open a new trading floor called Hana Infinity Singapore for Asian clients. Ultimately, it aims to provide optimized services around the clock in major foreign exchange markets during local times.
Girlfriend: Generally speaking, are clients looking for more reserves outside of traditional G5 currencies?
Kim: In response to the increase in transactions carried out in CNH, IDR, SAR, etc., amid robust growth in Asian countries, Korea has taken preventive measures such as allowing local currency transactions in IDR .
On the corporate side, there is a demand for diversification of foreign currency holdings due to currency hedging, global inflation and other reasons.
However, they hold currencies around the US dollar rather than non-G5 currencies (USD, ERU, JPY, GBP, CHF). We believe this is due to Korea’s heavy dependence on the United States. In particular, the recent increased volatility of the KRW-USD exchange rate has led companies to sign a contract in US dollars and not in local currency.
Girlfriend: In today’s rapidly changing foreign exchange environment, how can financial institutions help promote enterprise risk management and digital innovation?
Kim: Hana Bank plays a central role in the Northeast Asian foreign exchange market, through its participation in a wide range of markets, including trade finance and foreign exchange swaps between KRW, JPY and CNY, as well as ‘to the offer of various products. In particular, we offer foreign exchange risk management solutions that are best suited to corporate clients seeking to hedge the risk of fluctuating exchange rates. We also provide them with financing taking into account their liquidity position in order to help them manage their funds optimally.
Drawing on its experience in the foreign exchange and trade markets, Hana Bank is strengthening its presence in emerging economies (Vietnam, Indonesia, etc.) to offer foreign exchange services to corporate clients. In line with the digital transformation of the foreign exchange market, we have developed and implemented our own foreign exchange platform, which now extends to the global market. At the same time, we offer API-based banking services tailored to customers’ unique situations with the aim of providing optimal products to meet their different needs.
Girlfriend: As in other areas of investment banking, are clients increasingly looking for tailor-made offers? How do you respond to these requests?
Kim: The global foreign exchange market is evolving towards a trading platform without physical and temporal constraints. Among electronic approaches, APIs provide corporate clients with personalized foreign exchange data, including information on exchange rates. The API service allows clients to transact using their ERP system or internal program by connecting the API to an FX platform. By leveraging APIs, businesses can receive real-time exchange rate information based on their foreign exchange risk profile and carry out foreign exchange transactions at any time.
Girlfriend: How does AI – and other cutting-edge technologies – play a role in this?
Kim: Foreign exchange transactions have long depended on the capabilities of traders and the foreign exchange flows of clients. But today, AI is reshaping the forex market: a growing number of future AI and algorithm-driven trading offerings are being designed using innovative technologies such as blockchain. These changes have led to a reduction in the time required for transactions and the creation of high-quality financial products and trading skills.
Under these circumstances, Hana Bank focuses on developing AI-based exchange rate forecasting models as part of efforts to provide tailored advisory services, including Robo Advisor. We expect the automation of currency trading to increase trading volume, contributing to abundant currency liquidity.