Trade Volume

Forex: Rate of Growth of Foreign Exchange Markets

Figures for daily turnover in foreign exchange trading

In the early 1970s, the daily turnover in foreign exchange markets was $18 billion.
Transaction volume increased more than fourfold between 1977 and 1980 and fourfold again between1980 and 1983. Trading doubled between 1983 and 1986, and tripled between 1986 and 1989, when it reached the sum of $590 billion. It increased by almost 40% between 1989 and 1992, when it amounted to $820 billion a day.

The 1995 daily foreign exchange trading figure of $1.19 trillion represents an increase of 45% on that for 1992 (or 30%, taking into account the depreciation of the dollar). The volume of foreign exchange trade has therefore increased by roughly 83 times in the last 30 years.

This massive increase in the volume of trade is due to the break up in the early 1970s of the Bretton Woods system of fixed parities among major currencies and a move to floating exchange rates. It is also due to the growing liberalisation of financial markets, and the introduction of electronic trading, which makes it possible to deal with a greater volume of trade.

FIGURES 1998:
BIS calculated that the global turnover in traditional foreign exchange markets in 1998 had reached an estimated daily average of $1.5 trillion, a growth of 26% on the figures for 1995. This slowing of the rate of growth is attributable to the introduction of the euro, and economic problems in Asia.

Global daily turnover in foreign exchange derivatives contracts traded over-the-counter was estimated at $961 billion in April 1998 (up a huge 66% since 1995). Exchange-traded currency derivatives amounted to another $12 billion daily.

The notional amount outstanding on all OTC (over-the-counter) foreign exchange derivatives in June 1998 was estimated at $22 trillion. The gross market value of these contracts was $982 billion. BIS calculated that the turnover in notional amounts of exchange-traded currency futures and options for 1998 was another $3.5 trillion.

Therefore the total figure for daily foreign exchange trading in 1998 can be estimated at $2.473 trillion, or $593.5 trillion for the year.