A global reserve bank survey confirms what many in the market have suspected: The FX market has grown immensely over the past three years.
The much-anticipated Bank for International Settlements (BIS) Triennial Survey of FX Market Turnover or 2004, released Sept. 30, revealed average daily FX turnover (the value of trading volume) rose from $1.2 trillion in 2001 to $1.88 trillion in April 2004, a 57-percent increase at current exchange rates and a 38-percent increase using 2001 exchange rates.
The triennial report by the BIS, based in Basel, Switzerland, said the rise followed a surge in interest from hedge funds and asset managers.
The 2004 survey shows a large increase in activity in traditional foreign exchange markets compared to 2001. Turnover rose across instruments, but particularly in the spot and forward markets, according to the BIS.
In addition to valuation effects, factors boosting turnover include individual trader and investor interest in foreign exchange as an asset class alternative to stocks and bonds.
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