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London Remains World’s Foreign Exchange Trading Powerhouse

London traded nearly twice as much currency than did New York according the latest data on foreign exchange markets provided by the Bank for International Settlements.

The daily average total turnover in foreign currency traded in London was $2.426BN in April 2016.

This is nearly double the size of trade sent through New York institutions ($1.272BN) according to the latest data from the Bank of International Settlements (BIS).

The BIS offer the most comprehensive snap-shot of global foreign exchange trade via their Triennial Central Bank Survey of foreign exchange and over-the-counter (OTC) derivatives markets.

London has retained the top spot since 1995 when the data series was first produced.

London has however seen volumes traded decline from the $2.726BN recorded in 2013, as has New York which turned over $1.263BN.

It would appear that London and New York have seen some of their market share slip at the expense of eastern trading centres.

Singapore occupied third spot once more in the global rankings with $517BN USD, up from 2013’s $383BN.

Hong Kong SAR has over taken Tokyo for fourth spot having turned over $437BN, up from 2013’s $275BN.

But Tokyo still increased turnover over the past three years having recorded $399BN, up from $374BN in 2013.

British Pound Fourth Most Traded Currency

Despite the UK’s preeminence in global foreign exchange trade, the British Pound remains the world’s fourth most traded currency on a net-net basis on account of the daily $650BN worth of Sterling traded.

This accounts for 13% of the market, which is actually up on 2013’s 12%. The largest share of the market held by GBP was at 16% in the 2004 survey.

The US Dollar retains top spot with $4.458BN worth of turnover, the Euro second with 1.591BN and the Yen at $1.097BN.

The Australian Dollar falls under Sterling as the world’s fifth most traded currency with daily turnover recorded at 353BN USD.

The Canadian Dollar is the 6th most traded ($261BN), the Swiss Franc 7th ($243BN), China’s Renminbi 8th ($202BN) and the Swedish Krona is 9th ($113BN).

Trading in foreign exchange (FX) markets averaged $5.1 trillion per day in April 2016, this is down from $5.4 trillion in April 2013.

Foreign exchange spot trading declined for the first time since 2001, even as activity in FX derivatives continued to increase.

Trading in OTC interest rate derivatives averaged $2.7 trillion per day in April 2016, up from $2.3 trillion in April 2013.

Tables in Full

Foreign exchange trade summary

Foreign exchange currency share

Country turnover

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Bank of Japan preparing for losses – Nikkei

According to an article from Nikkei, the Bank of Japan set funds aside for the first time in order to prepare for losses from its purchase program that could take place once the easing program ends in the future.

Key Quotes from the article:

“The Bank of Japan likely set aside funds for the first time to prepare for losses on its huge holdings of Japanese government bonds should the central bank end its monetary easing policy in the future.”

“The bank is thought to have reserved about 450 billion yen ($4.07 billion) for the year ended in March. The amount will become known when the BOJ releases financial statements as early as next week.”

“Though BOJ Gov. Haruhiko Kuroda has indicated that the bank could expand easing if it faces difficulty achieving its inflation target, the creation of the reserves is a move to prepare for an exit from monetary easing.”

“The BOJ pays most of its net income to the government, and this payment will decline if the bank sets aside reserves. Furthermore, the central bank's profits have suffered from the lower value of foreign-currency assets due to a stronger yen. As a result, payments to the government are estimated at 400 billion yen for fiscal 2015, down sharply from 756.7 billion yen in the prior year.”
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