Japan Rounds Out FX Surveys: Global Volume to New High

More than two weeks after its fellow FX committees published their semi-annual FX volume surveys for April 2024, the Tokyo FX Committee has released its results, and while activity remains steady in the centre, together with the other surveys, overall turnover has blown through the $7 trillion pre day threshold to a new high.

Average daily volume (ADV) in Japan in April 2024 was $449.5 billion, an increase of 5.2% on the same month in 2023, and the third highest recorded in Japan since the surveys started in 2006. There were mixed signals from the different products sets, with FX swaps seeing the largest increase, along with spot, while outright forwards and FX options saw activity decline.

While spot activity rose by 6.1% year-on-year, the broader picture is less positive for Japan, with ADV of $128.8 billion being below the average of the past 10 years ($130.5 billion), and approaching 10% below post-pandemic averages. The data would also have been boosted by Bank of Japan intervention late in April as Japanese authorities sought to slow the decline of the yen.

FX swaps ADV in April was $255.3 billion, an 8.3% year-on-year increase and the highest yet recorded by the Tokyo survey, but outright forwards activity declined by 8.5% to $45.5 billion per day. FX options activity also slipped, by 5.6% to $11.9 billion per day, although this survey was only the fourth time since 2006 that Japan has reported FX options ADV above the $10 billion mark.

Global Volume Above $8 Trillion?

With the Japan survey now in, the global picture for the FX industry looks very healthy, with the seven reporting FX committees seeing a total of $7.26 trillion per day. If activity remains at these elevated levels, a new high-water market will inevitably be established by the next Bank for International Settlements Triennial Survey of FX turnover, due to be taken in April 2025.

Although there are differences in how some of the surveys are conducted – most notably in the UK – global FX turnover in April 2022, according to the BIS, was $7.5 trillion per day. Collectively, the seven centres to report semi-annual data were responsible for 81.6% of global turnover across all products in April 2022.

Projecting those centres’ growth from April 2022 suggests that global FX turnover would have been very close to $8.25 trillion, a 9.9% increase from the 2022 BIS survey. This means that FX activity globally would have more than doubled since 2010, reinforcing the asset class’ position as the biggest financial market in the world.