Global FX market daily turnover hits $6.6t in 2020

A 40% increase in daily forex trading volume was noted over the last decade.

Daily turnover in the global foreign exchange market has hit $6.6t, with a 40% increase in a daily forex trading volume over the last decade, according to a bond research firm LearnBonds.

This marks a nine-year peak since daily FX turnover reached $4t in 2010. The 25% increase represented the first massive rise since 2001, LearnBonds said.

The swiss franc currency shock of 2015, the arrival of the new regulatory environment in the banking industry, and the predominance of risk-averse players on the market drove daily FX average turnover to drop to $5.1t in 2016.

But between 2016 and 2019, daily FX volume jumped 30% and grew by $1.5t over the period, represented the record high FX market growth for the last 19 years, the report said. This was primarily caused by the surge in FX swaps for liquidity management and hedging of foreign currency portfolios, the report said.

In 2019, FX swaps comprised 49% of the total FX market turnover where it reached $3.2t, a 34% increase compared to the previous report. Spot transactions ballooned to $1.98t, a 30% rise of the global FX volume the same year.

Network connections of FX markets globally has led to an increased concentration of trading in some financial hubs, with e-trading comprising 56% of total FX trading in 2019. Dealer-to-customer segment has experienced the most significant rise as a fast connected network over recent years, the report added.