2. Turnover in foreign exchange markets According to the 2016 Triennial Survey, turnover in global FX markets averaged $5.1 trillion per day in 2016(Table 1). This is down from $5. 4 trillion in April 2013, a month which had seen heightened activity in Japanese yen against the background of monetary policy developments at that time. In addition, exchange rate movements influence comparisons with previous surveys. In particular, the appreciation of the us dollar between 2013 and 2016 reduced the us dollar value of turnover in currencies other than the US dollar. When valued at constant(April 2016)exchange rates, turnover increased slightly, by about 4% between April 2016 and April 2013(Table 1). Nevertheless, the latest developments contrast with the strong growth in turnover observed between Triennial Surveys since 2001 Turnover by currencies and currency pairs The us dollar remained the worlds dominant vehicle currency. It was on one side of 88% of all trades in April 2016, up slightly from 87% in April 2013(Graph 1, left-hand panel). In contrast, trading in the next eight most liquid currencies has shifted notably The role of the euro in FX markets has continued to decline since the beginning of the euro area overeign debt crisis in 2010. The market share of the currency declined to 31% in April 2016 from 33% in April 2013 and 39% in April 2010 ( Graph 1, left-hand panel, and Table 2). 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(Table 3). In contrast, trading in the EUR/SEK and EUR/NOK currency pairs increased The share of the yen in global FX trading also declined, by 1 percentage point to 22% by April 2016(Graph 1, left-hand panel, and Table 2). This contrasts sharply with the currency' s 4 percentage point expansion reported in the previous survey, which coincided with the expansionary monetary policy shift of the Bank of Japan in April 2013. Trading in the three most actively traded yen cross rates-USD/JPY, EUR/JPY and JPY/AUD-contracted significantly from 2013 to 2016 Among the other heavily traded advanced economy currencies, the Australian dollar and Swiss franc also lost market share, from 8.6% to 6.9% and 5.2% to 4.8%, respectively; in contrast, the pound sterling, Canadian dollar, Swedish krona and Norwegian krone gained shares in global FX turnover The 2016 Triennial Survey shows a further significant rise in the global importance of several emerging market currencies. The renminbi became the most actively traded emerging market currency, overtaking the Mexican peso to become the worlds eighth most actively traded currency (Table 2). The average daily turnover of renminbi almost doubled, from $120 billion to $202 billion, between April 2013 and April 2016, representing a rise in the share in global FX turnover from 2%to 4%. Ninety-five per cent of renminbi turnover is due to trading against the US dollar. The average turnover of USD/CNY rose from $113 billion to $192 billion over the three-year period, with that pair moving up from ninth to sixth place g airs(table Several other emerging market currencies, particularly from the Asia-Pacific region, gained market share: the Korean won, Indian rupee and Thai baht were among the currencies that advanced in the ranking by two or three places(Table 2). In contrast, the turnover of some emerging market currencies peaked in 2013 and has since exhibited a significant decline(eg the mexican peso and Russian rouble) April 2013, see D Rime and A Schrimpf, Th ugh the lens of the 2013 Triennial Survey, B/s Quarterly Review, December 2013, pp 27-43, Is Triennial Central Bank Survey 2016
4 BIS Triennial Central Bank Survey 2016 2. Turnover in foreign exchange markets According to the 2016 Triennial Survey, turnover in global FX markets averaged $5.1 trillion per day in 2016 (Table 1). This is down from $5.4 trillion in April 2013, a month which had seen heightened activity in Japanese yen against the background of monetary policy developments at that time.2 In addition, exchange rate movements influence comparisons with previous surveys. In particular, the appreciation of the US dollar between 2013 and 2016 reduced the US dollar value of turnover in currencies other than the US dollar. When valued at constant (April 2016) exchange rates, turnover increased slightly, by about 4% between April 2016 and April 2013 (Table 1). Nevertheless, the latest developments contrast with the strong growth in turnover observed between Triennial Surveys since 2001. Turnover by currencies and currency pairs The US dollar remained the world’s dominant vehicle currency. It was on one side of 88% of all trades in April 2016, up slightly from 87% in April 2013 (Graph 1, left-hand panel). In contrast, trading in the next eight most liquid currencies has shifted notably. The role of the euro in FX markets has continued to decline since the beginning of the euro area sovereign debt crisis in 2010. The market share of the currency declined to 31% in April 2016 from 33% in April 2013 and 39% in April 2010 (Graph 1, left-hand panel, and Table 2). 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 (Table 3). In contrast, trading in the EUR/SEK and EUR/NOK currency pairs increased. The share of the yen in global FX trading also declined, by 1 percentage point to 22% by April 2016 (Graph 1, left-hand panel, and Table 2). This contrasts sharply with the currency’s 4 percentage point expansion reported in the previous survey, which coincided with the expansionary monetary policy shift of the Bank of Japan in April 2013. Trading in the three most actively traded yen cross rates – USD/JPY, EUR/JPY and JPY/AUD – contracted significantly from 2013 to 2016. Among the other heavily traded advanced economy currencies, the Australian dollar and Swiss franc also lost market share, from 8.6% to 6.9% and 5.2% to 4.8%, respectively; in contrast, the pound sterling, Canadian dollar, Swedish krona and Norwegian krone gained shares in global FX turnover. The 2016 Triennial Survey shows a further significant rise in the global importance of several emerging market currencies. The renminbi became the most actively traded emerging market currency, overtaking the Mexican peso to become the world’s eighth most actively traded currency (Table 2). The average daily turnover of renminbi almost doubled, from $120 billion to $202 billion, between April 2013 and April 2016, representing a rise in the share in global FX turnover from 2% to 4%. Ninety-five per cent of renminbi turnover is due to trading against the US dollar. The average turnover of USD/CNY rose from $113 billion to $192 billion over the three-year period, with that pair moving up from ninth to sixth place among the most traded currency pairs (Table 3). Several other emerging market currencies, particularly from the Asia-Pacific region, gained market share: the Korean won, Indian rupee and Thai baht were among the currencies that advanced in the ranking by two or three places (Table 2). In contrast, the turnover of some emerging market currencies peaked in 2013 and has since exhibited a significant decline (eg the Mexican peso and Russian rouble). 2 For a discussion of drivers of trading volumes in April 2013, see D Rime and A Schrimpf, “The anatomy of the global FX market through the lens of the 2013 Triennial Survey”, BIS Quarterly Review, December 2013, pp 27–43, www.bis.org/publ/qtrpdf/r_qt1312e.htm
Foreign exchange market turnover by currency and currency pairs Net-net basis, daily averages in April, in per cent elected currencies2 Selected currency pairs USDEUR USD/JPY 21.8 ME USD/EME USD/CNY 4.6 c USD/MXN 22 EUR/GBP KRW 0 6 一2018 2013 ■20162013 1 Adjusted for local and cross-border inter-dealer double-counting. 2 As two currencies are involved in each transaction, the sum of shares in individual currencies will total 200%. 3 Emerging market currencies Source: BIS Triennial Central Bank Survey. For additional data by currency and currency pairs, see Tables 2 and 3 on pages 10 and 11. Turnover by instrument and maturity Trading activity has changed unevenly across the main FX instrument categories. In particular, trading volumes of spot trades and FX swaps, the two largest instrument categories, have evolved in opposite Spot market trading activity fell by 19% to $1.7 trillion per day in April 2016. This is the first time since 2001 that spot turnover has fallen compared with a previous survey (Table 1). The share of spot transactions in total foreign exchange market turnover declined by 5 percentage points between Apri 013 and April 2016 to 33%(Graph 2). This decline in spot trading was the main driver behind the overall fall in global FX turnover compared with 2013 In contrast, turnover in FX swaps rose by 6% to $2.4 trillion per day in April 2016. FX swaps remained the most traded instrument, with their share in turnover rising 5 percentage points to 47% (Table 3). Still, the growth in FX swap turnover was significantly lower than the 27% growth rate between April 2010 and april 2013 BIS Triennial Central Bank Survey 2016
BIS Triennial Central Bank Survey 2016 5 Foreign exchange market turnover by currency and currency pairs Net-net basis,1 daily averages in April, in per cent Graph 1 Selected currencies2 Selected currency pairs 1 Adjusted for local and cross-border inter-dealer double-counting. 2 As two currencies are involved in each transaction, the sum of shares in individual currencies will total 200%. 3 Emerging market currencies. Source: BIS Triennial Central Bank Survey. For additional data by currency and currency pairs, see Tables 2 and 3 on pages 10 and 11. Turnover by instrument and maturity Trading activity has changed unevenly across the main FX instrument categories. In particular, trading volumes of spot trades and FX swaps, the two largest instrument categories, have evolved in opposite directions. Spot market trading activity fell by 19% to $1.7 trillion per day in April 2016. This is the first time since 2001 that spot turnover has fallen compared with a previous survey (Table 1). The share of spot transactions in total foreign exchange market turnover declined by 5 percentage points between April 2013 and April 2016 to 33% (Graph 2). This decline in spot trading was the main driver behind the overall fall in global FX turnover compared with 2013. In contrast, turnover in FX swaps rose by 6% to $2.4 trillion per day in April 2016. FX swaps remained the most traded instrument, with their share in turnover rising 5 percentage points to 47% (Table 3). Still, the growth in FX swap turnover was significantly lower than the 27% growth rate between April 2010 and April 2013
Foreign exchange market turnover by instrument Net-net basis, daily averages in April Graph 2 2001-16 2016 3000 010407101318 I Adjusted for local and cross-border inter-dealer double-counting Source: BIS Triennial Central Bank Survey. For additional data by instrument, see Table 1 on page 9 The us dollar continues to be on one side of 91% of FX swap transactions, a share virtually unchanged compared with previous surveys. The euro was on one side of 34% of FX swap transactions, also a virtually unchanged share since 2013. The share of the yen in total FX swap turnover rose to 19%in pril 2016, compared with 15% in 2013.3 Trading activity changed unevenly in other parts of the FX OTC derivatives market. Trading volume of outright forwards rose to $700 billion in 2016, a 3% increase from $679 billion in 2013. Trading volume of currency swaps grew much faster than in any other part of the FX market, although this instrument still remains the least traded, owing in part to the long maturity of the contracts. Turnover in currency swaps rose to $96 billion in 2016, a 79% increase from $54 billion in 2013 In contrast, trading volume of FX options declined to $254 billion in 2016, 24% lower than in 2013. The largest decline took place in yen cross rates, which declined to $74 billion in 2016 (ie by 52% from2013).4 The 2016 survey shows a tendency towards slightly longer maturities of FX swaps and outright forwards. For instance, 30% of FX swaps initiated in April 2016 had a contractual maturity of between seven days and one year, compared with 26%in 2013(Table 4). Similarly, 59% of outright forwards initiated in April 2016 had a contractual maturity of between seven days and one year, compared with 56% in April 2013 3 For an analysis of investor positioning in yen FX swaps and related FX derivatives, see C Borio, R McCauley, P McGuire and V Sushko,"Covered interest parity lost: understanding the cross-currency basis", BIS Quarterly Review, September 2016 These changes have to be interpreted in the context of the surge in yen options trading in April 2013, when players such as hedge funds used the options market to express their directional views on the yen given the expansionary shift in Japanese monetary policy in April 2013: for a more detailed discussion, see D Rime and A Schrimpf(2013), op cit. Is Triennial Central Bank Survey 2016
6 BIS Triennial Central Bank Survey 2016 Foreign exchange market turnover by instrument Net-net basis,1 daily averages in April Graph 2 2001–16 USD bn 2013 2016 1 Adjusted for local and cross-border inter-dealer double-counting. Source: BIS Triennial Central Bank Survey. For additional data by instrument, see Table 1 on page 9. The US dollar continues to be on one side of 91% of FX swap transactions, a share virtually unchanged compared with previous surveys. The euro was on one side of 34% of FX swap transactions, also a virtually unchanged share since 2013. The share of the yen in total FX swap turnover rose to 19% in April 2016, compared with 15% in 2013.3 Trading activity changed unevenly in other parts of the FX OTC derivatives market. Trading volume of outright forwards rose to $700 billion in 2016, a 3% increase from $679 billion in 2013. Trading volume of currency swaps grew much faster than in any other part of the FX market, although this instrument still remains the least traded, owing in part to the long maturity of the contracts. Turnover in currency swaps rose to $96 billion in 2016, a 79% increase from $54 billion in 2013. In contrast, trading volume of FX options declined to $254 billion in 2016, 24% lower than in 2013. The largest decline took place in yen cross rates, which declined to $74 billion in 2016 (ie by 52% from 2013).4 The 2016 survey shows a tendency towards slightly longer maturities of FX swaps and outright forwards. For instance, 30% of FX swaps initiated in April 2016 had a contractual maturity of between seven days and one year, compared with 26% in 2013 (Table 4). Similarly, 59% of outright forwards initiated in April 2016 had a contractual maturity of between seven days and one year, compared with 56% in April 2013. 3 For an analysis of investor positioning in yen FX swaps and related FX derivatives, see C Borio, R McCauley, P McGuire and V Sushko, “Covered interest parity lost: understanding the cross-currency basis”, BIS Quarterly Review, September 2016 (forthcoming). 4 These changes have to be interpreted in the context of the surge in yen options trading in April 2013, when players such as hedge funds used the options market to express their directional views on the yen given the expansionary shift in Japanese monetary policy in April 2013; for a more detailed discussion, see D Rime and A Schrimpf (2013), op cit