South Korean banks' foreign exchange trading volume rose 1.2 percent in the second quarter from three months earlier due to growing demand for foreign currency transactions caused by brisk external trade such as exports and imports, the central bank said Wednesday.

The daily average foreign exchange turnover in the inter-bank market amounted to 22.72 billion U.S. dollars during the April- June period, up 1.2 percent from three months before, according to the Bank of Korea (BOK).

The growth was mainly ascribable to continued growth in external trade. South Korea's trade volume breached the landmark 1 trillion dollar last year for the first time in its history, and the volume hit a new high of 539.8 billion dollars in the first half of this year.

The daily turnover of posts contracted 2.1 percent on-quarter to 10 billion dollars in the second quarter, but the trading volume of FX swaps expanded 6.2 percent to 11.27 billion dollars. The volume of foreign exchange forwards trading grew 42.9 percent to 100 million dollars over the same period, but the volume of other derivative products such as cross currency swaps and forex options retreated 13.5 percent to 1.35 billion dollars.

Local companies took net long positions worth 1.6 billion dollars in the three months ending June 30 in the forwards market, but the position declined from 6.8 billion dollars in the previous quarter. Exporters increased short positions in the forwards market, while energy importers decreased long positions amid falling commodity prices, said the BOK.

As for non-deliverable forward (NDF) transaction, offshore traders logged net selling worth 620 million dollars in the second quarter, a turnaround from 860 million dollars of net buying positions. The turnaround came as offshore investors increased their bet over the South Korean currency's appreciation against the greenback amid easing signs of the global financial market jitters.

Meanwhile, the won/dollar foreign exchange volatility came in at 0.36 percent in the second quarter, ranking the fifth-lowest among 15 currencies of G20 nations. The volatility was up 0.01 percentage point from three months before due to growing jitters in the global financial market.