The US dollar has been remaining dominant in a growing foreign exchange market. Share of trades with the euro, renminbi, and emerging market economies (EMEs) currencies continues to grow. However, the share of trades with the Japanese yen has shrunk.
Trade in foreign exchange markets has grown in the 2016-2019 period, with the US dollar being the primary currency for trade. According to the 2019 Bank of International Settlements’ Triennial Central Bank Survey, the US dollar retained its dominant currency status, being on one side of 88% of all trades. Trading in FX (foreign exchange) markets reached $6.6 trillion per day in April 2019, up from $5.1 trillion three years earlier. Growth in FX derivatives trading, especially in FX swaps, outpaced that of spot trading.
The share of trades with the euro and Japanese yen has grown and shrunk respectively. The share of trades with the euro on one side expanded somewhat, to 32%. This reflected higher than market average growth in EUR/JPY and EUR/CHF trading. The share of trades involving the Japanese yen fell some 5 percentage points, although the yen remained the third most actively traded currency, being on one side of 17% of all trades. The fall in JPY turnover was mostly due to a contraction in the important JPY/USD cross amid low volatility. By contrast, trading in other popular JPY crosses, such as EUR/JPY and AUD/JPY, increased over the three-year period. In addition, trading in yen against several high-yielding EME currencies that are attractive for Japanese retail margin traders, albeit small relative to total JPY turnover, grew faster than the global average. Specifically, the combined average daily turnover in JPY/TRY, JPY/ZAR, and JPY/BRL close to doubled, from $7 billion in 2016 to $12 billion in 2019.
The trade rankings for advanced economy currencies remained unchanged, but the renminbi and emerging market economies (EMEs) currencies gained market share globally. The market shares for other heavily traded advanced economy currencies in April 2019 were unchanged from their 2016 values, with the GBP at 13%, the AUD at 7%, the CAD at 5% and the CHF at 5% of global FX turnover. Currencies of emerging market economies (EMEs) gained market share, reaching 25% of overall global turnover. Turnover in the renminbi grew only shortly faster than the aggregate market, and the renminbi did not climb further in the global rankings. It remained the eighth most traded currency, with a share of 4.3%, ranking just after the Swiss franc.
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