Global crisis drives investors to foreign-exchange markets

09:37, September 03, 2010      

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The global economic crisis has driven investors to forex markets where turnover has soared to a staggering $4 trillion a day - equal to what Germany produces in a year.

Overall, daily global turnover in foreign-exchange markets grew 20 percent to some $4 trillion by April, up from $3.3 trillion three years earlier, according to a Bank of International Settlements' (BIS) report.

Britain maintained its leading position as the world's largest forex center with 36.7 percent of the total trade.

The United States was second with 18 percent, followed by Japan with 6 percent.

The sums are almost beyond belief but reflect how global investors have come to see the forex markets as an increasingly sound option as the economic crisis scuttles other asset classes, most notably stocks and, for a while, commodities.

As the pot has grown, investors have also begun to look beyond the dollar.

The BIS report showed that the dollar accounted for 84.9 percent of all trades in April, down from 90 percent in 2001, while the euro rose 2 percentage points to 39 percent and the yen was also up 2 percentage points to 19 percent.

Because currency trades typically involve two currencies, the total percentage for the market is given as out of 200 percent rather than 100 percent.

Emerging-market currencies have also gained popularity, with the market share of 23 currencies growing to 14 percent in April from 12.3 percent in the previous survey in 2007.

"The most significant increases were seen for the Turkish lira and the Korean won," the BIS said.

Source: Global Times


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