The Bank for International Settlements’ triennial foreign exchange and interest rate derivative surveys underscored increased emerging market trading shares largely at the expense of the euro and yen with continued dollar dominance. For twenty years the Basel-based organization has compiles these statistics and the latest effort drew on 50 central banks assembling data from over 1000 commercial banks and institutional dealers. Daily currency turnover was $5.1 trillion, down from $5.4 trillion in 2013, but when adjusted for dollar strengthening it rose 5 percent. The greenback was again on one side of the trade almost 90 percent of the time, while the euro dropped to 30 percent from ten points higher in 2010 due to the Eurozone debt crisis. The yen also slipped to 22 percent and the Aussie dollar and Swiss franc also slipped 1 percent for 5 percent range chunks. Emerging economies’ rise was “significant,” as the Chinese renimbi replaced the Mexican peso as the leader with $200 billion in daily activity and doubled its global slice to 4 percent. The Russian ruble also dropped on the list to almost 20th place at 1 percent, while Asian currencies including the Korean won, Indian rupee and Thai baht improved, ranking between 15-25. Brazil’s real, Turkey’s lira, and South Africa’s rand were in the top twenty rung. The spot market declined 20 percent over the three-year period to $1.7 trillion/day for one-third of volume, while swaps jumped 5 percent to $2.5 trillion for almost half of trading, although the growth rate slowed from the 2010-13 25 percent clip. Outright forwards were the largest segment at $700 billion, while options shrank by one-quarter to $250 billion, and they tended toward longer one week to one year maturities. By counterparty non-bank dealers raised their portion to 40 percent, while non-reporting smaller and regional banks contributed 20 percent of turnover and institutional investors were involved in 15 percent of trades, particularly swaps. Hedge fund and bank proprietary arm participation was off 30 percent to $200 billion daily, reflecting business and regulatory retrenchment. By hub location the UK took almost 40 percent as of April 2016 before the Brexit vote, and the US was constant with 20 percent. Asia specifically Tokyo, Hong Kong and Singapore boosted intermediation from 15 percent to 20 percent of the aggregate, aided by Chinese Yuan focus.
The companion over-the-counter interest rate derivatives reading traced a daily uptick to $2.7 trillion from the previous $2.3 trillion, with the dollar supplanting the euro as the most popular currency. Countries with negative interest rate such as the Nordics had sharp falls, while sterling and the Australian and Canadian dollars jumped. Emerging market units gained, but the greenback’s surge over the timeframe “understated” the shift, with contracts spiking for the Mexican, Chilean and Colombian pesos and Hungary’s forint. Hong Kong and Singapore dollar transactions were also up, while Chinese renimbi, Indian rupee and Brazilian real engagement slipped double-digits. Swaps were the chief driver at 70 percent of business, and the US edged out the UK as the leading processor, each with around 40 percent shares. In Hong Kong and Singapore daily dealing exceeded Tokyo’s $55 billion, which slid 20 percent from 2013 on Abenomics’ long-term zero interest rate policy trying to topple deflation assumptions.