Source: Investopedia.com
In the turbulent world of foreign exchange, the seven most heavily traded currencies occupy a fairly rigid hierarchical order. But though some position shuffling does take place in the top ranks, those moves pale in comparison to the action on the next rung of the forex ladder. In recent years, a number of second-tier currencies have seen a huge increase in their share of global forex turnover, posing a challenge to the established hierarchy. While some of these seven currencies may be obvious, others are less so. Before we delve into learning more about these emerging currencies, let’s take a quick look at the colossal global forex market and the currencies that presently dominate trading in it.
Global Forex Turnover is Soaring
The Bank for International Settlements’ (BIS) triennial survey of forex turnover (or trading volume) is perhaps the most authoritative source of global forex trading data. According to the BIS survey conducted in April 2013, global forex market activity was a staggering $5.3 trillion per day in that month, an increase of 33% from daily turnover of $4 trillion in 2010. Forex turnover has more than quadrupled since 2001, when it was just over $1.2 trillion.
Total forex turnover is estimated to have declined by about $300 billion since the survey period to approximately $5 trillion, which still represents an impressive 25% growth rate from 2010. Expectations of a major shift in Japan’s monetary policy led to exceptional forex trading activity – particularly in the yen – in the run-up to the April 2013 survey.
The Established Forex Hierarchy
The 2013 BIS survey showed that the U.S. dollar continued to be numero uno by a very wide margin, contrary to occasional speculation about the greenback’s eventual demise. The U.S. dollar accounted for an 87.0% share of average daily forex turnover in April 2013. (Note that since two currencies are involved in each forex transaction, the sum of the percentage shares of individual currencies will total 200% rather than 100%.)
The next three positions were occupied by the euro (33.4% share), Japanese yen (23.0%) and British pound (11.8%). Among the major currencies, trading in the yen surged the most, rising 63% since the 2010 survey for reasons mentioned earlier. These top-four currencies have had the same ranks in the global currency hierarchy in this millennium, although their relative turnover share has fluctuated to a limited extent over the years.
The next three currencies in the April 2013 survey were the Australian dollar, Swiss franc and Canadian dollar. These currencies have swapped places among themselves since 2001. For example, the Australian dollar ranked seventh that year, but it doubled its share of global forex turnover since then to become the fifth-most traded currency in 2013.
Forex is an ever changing market and that is why the earning never stops...
If the learning stops, the Earning stops too...
That is just my opinion.
have a nice weekend,
Yours sincerely,
Check Out my other posts here- My Justinnation
No comments:
Post a Comment