Global foreign exchange market turnover was 20 per cent higher this year than it was three years ago.
Foreign exchange, the world's biggest market, is shrinking | Reuters
Market share of hedge funds, mutual funds and pension funds recorded a significant increase. These were the findings of the triennial central bank survey of foreign exchange and derivative market activity of Bank of International Settlements BIS.
This survey covered the turnover in April as reported by 1, market participants in 53 countries and financial centres. This is the first time that Indian rupee along with currencies of other emerging economies such as Korean won, Brazilian real and Chinese renminbi were included in the survey.
Indian rupee's share in global foreign exchange market turnover increased to 0.
Foreign exchange market - Wikipedia
It needs to be noted that because two currencies are involved in each transaction, sum of percentage shares of individual currencies adds up to per cent instead of per cent. Share of Chinese renminbi is down from 0. Market share of 23 emerging market currencies increased to 14 per cent in April from Largest increases in emerging market currencies were in Turkish lira, Korean won, Brazilian real and Singapore dollar.
The increase in turnover in forex markets is due to increased trading activity of other financial institutions that include hedge funds, pension funds, mutual funds, insurance companies. This category excludes dealers who actively buy or sell currency and OTC derivatives both for their own or for their customers' use. Foreign exchange markets have also become more global with cross-border transactions representing 65 per cent of trading activity in April while local transactions accounted to 35 per cent.
Forex market: Average daily turnover in dollar-Re pair higher | Business Line
Cross-border transactions are showing a gradual increase since Share of overseas trading in was 54 per cent. The higher trading in spot is attributed to more active trading with other financial institutions. Trading with OFIs has increased to over half of spot turnover compared to 39 per cent in Trading in currency swaps and forwards grew at a lower rate in the last three years.
The top three currencies traded were the US dollar, euro and the Japanese yen. The Euro and the yen recorded the largest increase in turnover while the pound sterling recorded the largest decline.
The US dollar had a 90 per cent share of all transactions in Its share has declined to 85 per cent.
The euro has increased it share to 39 per cent and the yen to 19 per cent. Among currency pairs, USD-EUR has the highest share at 28 per cent.
Exchange rates provide weak investor signals This article was published in the Business Line print edition dated September 25, Related TOPICS economy general foreign exchange ul. Newsletter has been successfully subscribed.