The Bank for International Settlements (BIS) has published the December 2016 issue of the BIS Quarterly Review, which looks at data from the 2016 Triennial Central Bank Survey of foreign exchange (FX) and OTC derivatives markets.
Focus on FX
The main article – Downsized FX markets: causes and implications – in this edition of the quarterly publication looks at what is happening in global FX markets, focusing on the 2016 BIS survey.
The triennial FX survey, which is a benchmark of the global FX market, was conducted in April this year. Analysis of the survey results suggest there are three emerging themes:
- changes in the role and composition of market participants;
- the evolving role of emerging market currencies; and
- monetary policy as a driver of market developments.
The survey shows that global FX turnover fell to $5.1 trillion per day in April 2016, from $5.4 trillion in April 2013. The graph below shows how the global FX markets have developed in the past decade. For the first time since 2001, global FX trading decreased between 2013 and 2016. Spot trading fell to $1.7 trillion per day in April 2016, from $2.0 trillion in 2013, while trading in most FX derivatives, particularly FX swaps, continued to grow. Some emerging market currencies also gained market share, most notably the renminbi.
The BIS Quarterly Review also included articles on the following topics:
FX Risk Management in a New Era of Volatility
New AFP Executive Guide examines factors that affect treasury practitioner’s ability to identify and manage foreign exchange risk, and the key stages required in setting and implementing a FX risk management policy
FX global code of conduct to promote standards and efficiency
The Bank for International Settlements has published the first phase of the global code of conduct for global FX markets, aimed at raising standards and promoting fairness and efficiency in currency markets.
FX volatility catches corporates unprepared
FX volatility during the past year has put increased pressure on corporate hedging programmes, according to a survey by Wells Fargo.