Global foreign exchange trading volumes have increased by
about 20% over the last three years, according to the latest data from the Bank for International Settlements.

The latest triennial survey of 53 central banks and monetary authorities examining the size and structure of global foreign exchange markets was carried out this past April, and today the BIS released the results. The survey found that global foreign exchange market turnover was 20% higher in April 2010 than in April 2007, with average daily turnover of $4.0 trillion compared to $3.3 trillion. The increase was driven by the 48% growth in turnover of spot transactions, which represent 37% of foreign exchange market turnover, the BIS said.

Additionally, it reported that higher global FX turnover is associated with the increased trading activity of “other financial institutions”, including non-reporting banks, hedge funds, pension funds, mutual funds, insurance companies and central banks, among others. Turnover by this category grew by 42%, increasing to $1.9 trillion in April 2010 from $1.3 trillion in April 2007. For the first time, activity of reporting dealers with other financial institutions surpassed inter-dealer transactions, the BIS said.

Among the 10 most actively traded currencies, the Australian and Canadian dollars both increased market share, while the pound sterling and the Swiss franc lost ground. The market share of emerging market currencies increased, with the biggest gains for the Turkish lira and the Korean won. And, the share for the US dollar continued its slow decline.

The survey also found that activity in over-the-counter interest rate derivatives grew by 24%, with average daily turnover of $2.1 trillion in April of this year. Almost all of the increase relative to the last survey was due to the growth of forward rate agreements, which increased by 132% to reach $601 billion, the BIS said.

The Bank of Canada reported that average daily FX volumes in Canada fell by 2.3% over the period, from US$59.8 billion in April 2007 to US$58.4 billion in April 2010.

IE