BIS 2016 Survey Shows Global Forex Turnover Dropping for the First Time Since 2001

The Bank for International Settlements in Basel. Photo: Reuters

Figures in the newly released Triennial Survey for 2016 - which is the most comprehensive study of trends and data in the global FX marketplace, conducted by the Bank For International Settlements (BIS) every three years - revealed that daily turnover in the Forex market has dropped for the first time since 2001. The BIS has been keeping track of FX market activity since 1986.

Daily FX volume averaged close to $5.1 trillion in April of 2016. In April of 2013, when the last survey was conducted, global FX volumes were close to $5.4 trillion.

The 2016 survey also revealed the rapid decline in global spot FX transaction volume. During the last survey, daily turnover in spot transactions was $2 trillion, in April of 2016, this figure had dropped to $1.7 trillion per day - a 15% drop.
“This decline in spot trading was the main driver behind the overall fall in global FX turnover compared with 2013.”
However, FX swaps volumes have risen from $2.2 trillion in April of 2013 to $2.4 trillion in April of 2016. Forex swaps are primary used by financial institutions and companies, and the survey highlighted that the 8.3% rise in FX swap turnover came mainly from transactions involving the Japanese yen.

The winners:

The U.S. dollar is still king with $4.458 trillion in daily turnover; $1,387 billion in spot transactions; $600 billion in outright forwards; $2,165 billion in FX swaps; $88 billion in currency swaps; $218 billion in FX options:

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While the dollar represents 88% of all daily FX turnover globally, the United Kingdom retains its crown as the FX trading capital of the world, registering $2.426 trillion in daily volume in the Triennial Survey for 2016. That is almost double the figures for the U.S., which came in at $1.272 trillion per day:

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The Chinese renminbi yuan has also become the 8th most traded currency in the world, with an average daily volume of $202 billion.
“The renminbi doubled its share, to 4%, to become the world’s eighth most actively traded currency and the most actively traded emerging market currency, overtaking the Mexican peso. The rise in the share of renminbi was primarily due to the increase in trading against the US dollar.”
Besides the yuan, the Canadian dollar, British pound, Norwegian krone and Swedish krona have gained share in the global FX market. The recent survey also demonstrated that several emerging market currencies like the Korean won, Indian rupee and Thai baht have jumped several spots on the global FX leaderboard.

The losers:

Figures from the Triennial Survey for 2016 revealed the euro has been losing share in the global FX market in the aftermath European debt crisis in 2010. In fact, the euro’s share has been declining since April of 2010, when the currency had 39% market share. By 2013, that number was down to 33%, and the 2016 figures came in at 31 percent.

While trading in the EUR/SEK and EUR/NOK has increased, turnover in all other euro pairs has slowed down.
“Trading in the four most actively traded euro currency pairs – USD/EUR, EUR/GBP, EUR/JPY and EUR/CHF – fell. USD/EUR average daily turnover declined by $119 billion, while the relative declines were most pronounced for the EUR/JPY and EUR/CHF pairs.”
The Japanese yen’s market share has dropped by 1%, while the Australian dollar and Swiss franc lost 1.7% and 0.4%, respectively.
“Trading in the three most actively traded yen cross rates – USD/JPY, EUR/JPY and JPY/AUD – contracted significantly from 2013 to 2016.”