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Feb. 6 (Bloomberg) -- Foreign-exchange trading in North America rose to a record $977 billion a day in October, while slowing in the U.K., Australia and Singapore, according to central bank surveys.
The average daily volume in October compares with a revised $856 billion in April and $809 billion in October 2010, the Federal Reserve’s Foreign Exchange Committee said in a statement today, citing results from its semi-annual survey. The October 2011 increase was due mainly to a 28 percent rise in spot turnover from the April period.
Turnover in the euro versus the dollar represented 37 percent, or the largest share, of reported trading. Dollar-yen trading was the second busiest at 10 percent.
Volatility escalated last year as Europe’s debt crisis roiled markets and fueled concern global economic growth would slow. Implied volatility of Group of Seven currencies reached a 16-month high of 15.77 percent in September, according to the JPMorgan G7 Volatility Index, which has averaged 12.03 percent during the past five years.
“There was a greater willingness to back certain movements amongst well-capitalized banks,” Andrew Wilkinson , chief economic strategist at Miller Tabak & Co. in New York, said in a telephone interview, in reference to North American banks. “The outlook became cloudier, which means it became more difficult to substantiate positions, so it’s possible risk takers in general took a step back.”
The North American trading gains came even as total turnover in Canada declined 14.4 percent, according to a survey by the Canadian Foreign Exchange Committee, the first decline in turnover since April 2009. Average daily turnover of foreign- exchange derivatives fell 15.4 percent to $3.3 billion.
Currency-market trading in the U.K. dropped 3 percent to $1.97 trillion a day in October compared with April, the Foreign Exchange Joint Standing Committee said in a statement on the Bank of England’s website today. The fall was led by a 9 percent drop in foreign exchange swaps activity. Spot turnover rose 2 percent to a record high, the committee said.
In Australia, average daily turnover decreased 23 percent to $167.9 billion in October from April and fell 14 percent from the previous year, the Australian Foreign Exchange Committee said on the Reserve Bank of Australia’s website today.
Trading dropped 1.1 percent in Singapore during the six- month period, according to the Singapore Foreign Exchange Market Committee. Average daily turnover in over-the-counter foreign- exchange derivatives fell 2.1 percent to $46 billion.
The U.S. Foreign Exchange Committee obtained data for the month of October from 25 financial institutions active in the North American foreign exchange market. It worked in collaboration with the committees from the U.K., Singapore, Australia and Canada.
--Editors: Paul Cox, Dave Liedtka
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