No. 2189


NEW YORK -- The Federal Reserve Bank of New York today announced that the average daily volume of foreign exchange (FX) turnover in the United States rose to $351 billion in 1998 from $244 billion in 1995. The change represents a 43 percent increase over the three-year period and an annualized growth rate of 13 percent.

While the annualized growth rate of 13 percent remained the same as that reported in the 1995 survey, the composition of turnover in the FX market in the United States has changed so that foreign exchange swaps turnover volume now surpasses spot turnover.

Turnover in the foreign exchange swap market doubled to $166 billion a day or 47 percent of total turnover, while the proportion of turnover volume in the spot market decreased to 42 percent of total turnover from 55 percent in 1995.

In the foreign exchange and interest rate derivatives markets, which were surveyed concurrently, the volume of turnover increased 75 percent from 1995 to 1998, an annualized growth rate of 20 percent. Daily turnover volume rose to $91 billion in 1998 from $52 billion in 1995.

Electronic brokerage (automated order matching) is up three-fold from the last survey to $47 billion daily. This electronic trading occurs almost entirely in the spot market.

The FX and derivatives turnover data are part of an ongoing series of surveys conducted every three years by central banks in cooperation with the Bank for International Settlements.

The survey, called the 1998 Central Bank Survey of Foreign Exchange and Derivatives Markets (pdf), looks at size, structure and trends in FX and derivatives markets.

Survey data from participating countries has been compiled by BIS and will be adjusted to eliminate double counting before expected release later this year. The survey now includes 44 countries. The first attempt to produce an aggregate total was in 1986 when four countries contributed to the survey. The survey was expanded in 1989 to 21 countries and increased to 26 countries in 1992 and 1995.