UK-based currency trading fell 9% y/y in April: BoE

[LONDON] Foreign exchange trading out of London fell 9 per cent in April 2016 compared with a year earlier, to US$2.2 trillion, a semi-annual survey by the Bank of England showed on Monday.

Around two thirds of the world's biggest financial market flows through London and the report by the Bank precedes a keenly awaited triennial global report from the Bank of International Settlements due in September.

Currency trading has been hit over the past three years by changes in regulations aimed at getting banks to take less risk and a market-rigging scandal that culminated in dozens of traders being suspended or fired and banks fined billions of dollars.

Despite the drop in volumes from a year ago, trading activity was up 5 per cent in the six months to April 2016, driven mainly by renewed interest in the dollar/yen currency pair, the BoE said.

Japan's central bank, in surprise move in January, announced negative interest rates, pushing the dollar temporarily above 121 yen in early February. The dollar has since fallen to trade at 106.20 yen on Monday.

Spot turnover fell 21 per cent year-on-year, to US$755 billion per day, although it was also up 4 per cent in the six months to April 2016. Dollar/yen trading showed a 27 per cent jump during that period to US$361 billion a day.

The survey also showed that turnover in sterling/dollar rose in the months before Britain's vote to leave the European Union while volumes in the Australian dollar and the Chinese yuan waned.

Latest data shows that volumes have picked up in June, post Britain's shock vote to leave the European Union.

The surge in volatility of the pound and other major currencies around Britain's vote on June 23 - which trading platforms said more than doubled normal trading - pushed global volumes to US$5.19 trillion in June from US$4.61 trillion a day in May, according to settlement system CLS.

REUTERS