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What is happening in FOREX?

The foreign exchange market (forex, FX, or currency market) is an exchange for the global decentralized trading of worldwide currencies. Financial centers around the world, typically London, New York, Tokyo and Sydney, function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends, i.e, 24/5.

The foreign exchange market is the most liquid financial market in the world. Traders include central banks, large banks, institutional investors, corporations, governments, other financial institutions, currency speculators, and retail investors. The top 10 currency traders as of May 2011 is below:

Top 10 currency traders
( % of overall volume, May 2011 )

NameMarket share
1Deutsche Bank15.64%
2Barclays Capital10.75%
3UBS AG10.59%
7Royal Bank of Scotland6.20%
8Credit Suisse4.80%
9Goldman Sachs4.13%
10Morgan Stanley3.64%

The average daily turnover in the global foreign exchange and related markets is continuously growing rapidly, according to the Triennial Central Bank Survey*. For example, the average daily turnover was US$3.98 trillion in April 2010 vs $1.7 trillion in 1998. As you see in the chart below, it went up 700% from US$0.5 trllion in 1988. Moreover, Spot Forex turnover rose to US$1.5 trillion in April 2010 from US$1.0 trillion in April 2007. We will talk about Spot Forex soon. The following chart is showing all eight survey results.

Triennial Central Bank Survey Data

Note: * Triennial Central Bank Survey: The BIS coordinates a global central bank survey of foreign exchange and derivatives market activity on behalf of the Markets Committee and the Committee on the Global Financial System every 3 years. The survery is conducted in the following financial centres by local Foreign Exchange Committees: Australia, Canada, Hong Kong SAR, London, New York, Tokyo and Singapore.)

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