According to the Bank for International Settlements (BIS), $4,000bn is being traded daily on average. The figures are up from $3,300bn in 2007 as bankers have become increasingly interested in foreign exchange following the financial crisis.
The surge in FX trading follows the search for less risky sources of profits in uncertain times. The report also showed that most of the business was happening in London, with turnover up by 25% over the period. Whilst some $4 trillion change hands around the word every day, 37% of global turnover take place in London. The US and Japan came in second and third.
The Bank of England highlighted another trend whereby only a handful of banks including Deutsche Bank and Citigroup take up most of the market share in the FX market.
The world’s most-traded currency is still the dollar, accounting for 85% of all transactions. Euro/dollar remained the most dominant currency pair, with a 28% share.
The growth in currency trading has been driven by a combination of hedge funds, insurance firms, central banks and other non-bank financial institutions.
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