Canada's Currency Trading Volume Falls for 1st Time Since 1983, BIS Says

Canadian foreign-exchange trading declined this year for the first time since central banks began a tri-annual survey in 1983, according to the Bank of Canada.

Turnover including spot, outright forwards and foreign- exchange swaps transactions in April was $58.4 billion a day, down 2.3 percent from $59.8 billion a day in April 2007, the survey said. April 2010 had one more business day, so overall volume rose 2.5 percent to $1.23 trillion for the month, the slowest rate of growth since the survey began in 1983.

Currency-trading in Canada reflected trends in the global market, as heightened price swings after the seizure of global credit markets cut risk appetite, a Bank for International Settlements survey showed. Global foreign-exchange trading grew 20 percent to $4 trillion a day on average through April, lagging behind the 72 percent, three-year expansion recorded in the last survey, published in 2007.

The BIS was formed in 1930 and acts as a central bank for the world’s monetary authorities. Its survey, conducted triennially, is based on data from 53 institutions, including the Bank of Canada.

The U.S. dollar was on one side of 94.2 percent of transactions in the Canadian market, down from 95.6 percent in 2007 and the lowest proportion since the survey started. About 70 percent of transactions involved the Canadian dollar, up from 68 percent three years ago.

Trading in Canadian-dollar interest-rate derivatives almost tripled since 2007 to about $567 billion a month, while those based on the U.S. dollar dropped 6.2 percent, the survey showed.

Derivatives are financial obligations whose value is derived from underlying assets such as debt and equity securities, currencies and commodities.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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