The survey conducted by the Bank for International Settlements or BIS, has shown that the global daily Forex volume has jumped a third between two consecutive triennial surveys. Accounting for most of this increase is the strong interest in swaps trading.
The total FX turnover was ultimately caused by a steady rise in FX swaps. Market participants use swaps for hedging currency risks and liquidity management. Furthermore, according to the survey, the figure this year reached $3.2 trillion. This surpassed almost over $800 billion or 34 percent from the previous BIS report.
This huge increase overshadowed for the 20 percent increase in spot trading. Between 2016 and 2019, the average daily volume climbed by $325 billion to $1.98 trillion. Despite this, the share of spot trades in global FX activity fell to 30 percent now from the 33 percent it had in 2016. In contrast though, FX swaps continue to increase market share, and account for 49 percent of the total FX market turnover in April this year.
London remains the king of global Forex
The top five centers of global trade experienced an increase in FX market activity. These centers, namely New York, Hong Kong, Tokyo, Singapore and London rose from 79 percent this year from a smaller 77 percent three years ago. As a result, FX market activity including forward, foreign exchange swaps, spot, and option transactions saw a relevant increase.
London may be in the middle of Brexit issues, but that has not dampened their lead as the king of global Forex trading this 2019. London remained the global FX trading capital, its other market share rose six percent to 43 percent in 2019. Asia’s main centers of global trading experienced a decline from their share of trading. It went down to 20 percent from the global total of 21 percent.
Lastly, in previous surveys, European Money currencies saw their market shares increase to 25 percent. With $284 billion in turnover, the Chinese offshore currency remained the eighth most traded currency, ranking just after the Swiss franc.
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