In April 2016, the daily turnover in foreign exchange transactions of financial institutions operating in Finland averaged USD 13.5 billion, i.e. EUR 11.9 billion. The daily turnover converted into euro was 4% higher than in April 2013, but the same change in terms of the US dollar was negative, –9%, owing to exchange rate movements. Global foreign exchange turnover has declined by about 5% in dollar terms during the last three years. Average daily turnover in the global foreign exchange market in April 2016 was USD 5,088 billion, i.e. EUR 4,487 billion. The relative share of transactions in or from Finland in global foreign exchange turnover was less than half a percent. This information comes from the triennial global survey by the Bank for International Settlements (BIS), implemented in Finland by the Bank of Finland.
In terms of turnover, two-legged foreign exchange swaps, accounting for 86% of total OTC foreign exchange turnover in Finland in relative terms, remained clearly the most significant forms of foreign exchange transactions in April 2016. Spot transactions, in which the currencies subject to trading are normally delivered within two days of trade execution, covered 7% of total Finnish OTC foreign exchange trading. The corresponding share of both forward and OTC option contracts was 3%. Mutual relative sizes in turnover for these different types of instruments have not changed markedly, compared with 2013.
In addition to foreign exchange transactions, the BIS survey examines OTC single-currency interest rate derivatives, whose average daily notional turnover in US dollars has decreased by 4% in Finland in the last three years, whereas globally this market has grown by 15%. However, the global rate of growth has slowed compared with the peak figures of the early years of the first post-millennium decade. In April 2016, trading in these contracts averaged USD 2.3 billion (EUR 2.0 billion) per day in Finland, while the corresponding global amount was USD 2,666 billion (EUR 2,351 billion).
Interest rate swaps continued to be the most traded types of OTC interest rate derivatives in Finland, although their relative share of all OTC interest rate derivatives contracts declined by 9 percentage points from the figure seen three years ago, to 70%. The corresponding share of forward rate agreements grew by 19 percentage points to 22%, whereas the share of OTC interest rate options contracted by 9 percentage points, to stand at 9%.
The most actively traded currencies in Finland are the euro and the US dollar: the euro was a counterpart currency in 71% and the dollar in 67% of the total turnover in the Finnish foreign exchange market in April 2016. The relative share of transactions in US dollars has grown in three years, whereas the shares of trades in the Swedish krona and the Danish krone have contracted. Globally, the most traded currencies since the introduction of the euro have been, in the order of magnitude, the US dollar, which was traded in 88% of all transactions in April 2016, and the euro (in 31% of all transactions) and the Japanese yen (in 22% of all transactions). The euro and the yen have lost their global market share since 2013, whereas turnover in the currencies of many emerging economies has increased and the market share of these currencies has grown. The Chinese yuan emerged as the eighth most traded currency, outstripping the Mexican peso.
Those contributing to the BIS survey in Finland are the most important financial institutions engaged in OTC foreign exchange and derivatives trading, which mainly include deposit banks. The bulk of Finnish foreign exchange and derivatives trading is carried out by subsidiaries and branches of foreign banks operating in Finland, either for their own account or on behalf of their customers. About 14% of foreign exchange transactions executed in Finland in April 2016 were local transactions. In most of these trades, one of the contracting parties was a non-financial sector market participant, such as a private enterprise.
For further information, please contact Senior Economist Kimmo Koskinen, tel. +358 10 831 2546, or Economist Pirkka Jalasjoki, tel. +358 10 831 2541.
The press release by BIS and the results of the global survey can be accessed on the BIS website at http://www.bis.org/publ/rpfx16.htm.
1 The BIS survey of foreign exchange and OTC derivatives markets activity is conducted in US dollars.