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Here’s How Much Currency Is Traded Every Day

It’s $5,100,000,000,000. that’s a trillion with a “t”.

This is a mind-boggling number, but it’s actually smaller than the $5.4 trillion average seen three years earlier.

Reading: How much money is traded daily on the stock market

This graph from HSBC shows the evolution in average levels of currency turnover, since 1998. The data comes from the Bis Triennial Survey of the Forex Market and is based on volumes traded in April of this year.

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hsbc notes that the decline in turnover was the result of a sharp drop in foreign exchange spot volumes, with average daily volume falling to $1.65 trillion this year, a 19% decline from three years earlier, that stood at more than $2 billion a day.

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According to bis data, the drop in spot volumes was partially offset by an increase in foreign exchange trading volumes.

hsbc also cautions that the recent strength of the US dollar “means that a non-US dollar currency transaction today looks smaller than the same transaction would have done in the 2013 survey.”

“This valuation effect has been quite significant: when volumes are measured in constant exchange rate terms, total FX volume actually showed a 3.5% increase between 2013 and 2016,” he says.

In other words, were it not for the US dollar strengthening, forex volumes were actually up from the previous three years.

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here are a couple of charts from hsbc showing the most traded currencies worldwide in april. As the world’s reserve currency, the US dollar clearly dominates, accounting for nearly 88% of total turnover.

and here is the same chart, excluding the US dollar. The Chinese renminbi’s share of foreign exchange turnover has clearly grown, at the expense of the euro, yen and Australian dollar.

“The usd’s dominant position is due, at least in part, to the usd being a core currency,” says hsbc.

“although it is possible to quote a price on any currency pair, in the interbank market (which is the ultimate generator of currency liquidity) most currencies can only be traded against a small number of other currencies, more commonly the US dollar.

“This means that when customers trade with a bank with a non-usd cross rate, the market-making bank is likely to split the transaction into two usd-based tranches,” he adds.

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