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FOREX trading reaches $5.3 trillion a day

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FOREX trading reaches $5.3 trillion a day

The foreign exchange market has become one of the most accessible financial markets in the world, bringing together millions of traders from over 190 countries. The rise of social trading, or user-generated financial content, has given rise to new opportunities for investors and laymen in every walk of life. It comes as no surprise, then, that currency trading reached $5.3 trillion a day in April 2013, according to the Bank for International Settlements.

Greater yen volumes were the main catalysts behind the jump, as the Japanese currency experienced the biggest surge in trading activity among the major currencies. The yen has experienced considerable volatility for much of 2013; as a safe haven, it has traded inversely with the Japanese stock market, and has reacted to unprecedented stimulus measures from the Bank of Japan. Yen trading jumped more than 60 percent between 2010 and 2013, with the most notable increase occurring between October 2012 and April 2013.

According to the BIS, trading increased more than 30 percent in three years, up from a 20 percent increase between 2007 and 2010. Emerging market currencies increased their share of global trade, with the Mexican peso joining the top-10 most actively traded currencies. Trade in Chinese yuan increased from $34 billion a day in April 2010 to $120 billion a day in 2013, becoming the ninth most-actively traded global currency. The euro remains world’s second-most traded currency, but its role has been reduced over the past three years, according to the BIS.

The foreign exchange will continue to grow as market participants expand their activities in emerging markets. Financial institutions are increasingly focusing on the currency markets following the 2008 financial crisis, which introduced new regulations that threaten the earnings of other divisions.

The US dollar continues to reign supreme in the international currency market. The greenback increased its lead as the world’s most traded currency, and now accounts for 87 percent of all trades. This represents an increase of 2 percentage points since the 2010 BIS survey.

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