July 30 (Bloomberg) -- Foreign-exchange average trading volume in the U.K. fell to $2 trillion a day in April, a drop of 5 percent from a year earlier, as the euro-region’s debt crisis deepened.
Average trading volumes in Japan, Australia and Singapore also dropped from April 2011 as rising borrowing costs in Europe’s core and a lack of confidence in the measures designed to stem the crisis damped investors’ willingness to change their positions. The euro fell in April, while Japan’s yen surged as investors sought a haven from the turmoil.
“Given there are long-held short positions in the euro that have been in play for the best part of a year, we’ve had a trend that has not caused too many disturbances,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “Consequently, we’ve had a lower volume of business.” A short position is a bet that an asset will decline in value.
Average daily trading declined 2 percent from October, according to a semi-annual survey published by the Foreign Exchange Joint Standing Committee on the Bank of England’s website today.
Average spot trading in the U.K. fell 12 percent to $711 billion per day in April, while currency-swaps trading increased 8 percent to $957 billion per day, the survey showed.
ICAP Plc, the world’s largest broker of transactions between banks, said May 7 that the average daily spot currency volume on its Electronic Broking System, or EBS, platform in April was $109.7 billion, down 26 percent from the same month last year.
In June, the average daily currency volume had risen to $137.6 billion, ICAP said July 5. CLS Bank, the New York-based operator of the largest currency-trading settlement system, handled an average 823,449 trading instructions per day in June, up from 740,342 a month earlier, according to a statement the same day.
“The sluggish global economy and euro-zone crisis are inevitably leading to reduced trading volumes,” ICAP Chief Executive Officer Michael Spencer said in a July 11 statement after the broker announced fiscal first-quarter sales fell 9 percent. “The lack of aggressive action to resolve the euro-zone crisis is not helping to normalize financial market activity in the near term.”
The average daily trading volume of foreign currencies in Tokyo fell 7.6 percent to $262.8 billion in April from a year earlier, Japan’s Foreign Exchange Market Committee said, citing a survey of financial institutions.
Average daily turnover in Australia slid 20 percent to $175.7 billion, compared with the same month a year earlier, the Australian Foreign Exchange Committee said today, citing a similar poll.
Foreign-exchange trading in North America fell to $860 billion a day in April, a decrease of 12 percent from October 2011, according to a report released by the Federal Reserve Bank of New York.
Average daily currency transactions executed by traders in Canada advanced 14 percent to $59.6 billion in April, from $52.4 billion in October 2011, according the Canadian Foreign Exchange Committee.
The Singapore Foreign Exchange Market Committee said currency-trading volumes averaged $300 billion a day in April, a 6.7 percent decrease from October.
Currency trading may have risen to a record $5 trillion a day in September, surpassing the peak reached before Lehman Brothers Holdings Inc.’s collapse in 2008, the Bank for International Settlements said March 11.
Trading then declined to about $4.7 billion a day in October and is likely to have fallen considerably in early 2012, the Basel, Switzerland-based bank said in a report.
Deutsche Bank AG kept its position as top foreign-exchange trader for an eighth-straight year in an annual survey by Euromoney Institutional Investor Plc.
Citigroup Inc. leapfrogged Barclays Plc and UBS AG to become the second-biggest currency trader, Euromoney said in an e-mailed statement on May 9. Barclays slipped to third place and UBS to fourth, while HSBC Holdings Plc climbed into the top five.
To contact the editor responsible for this story: Daniel Tilles at email@example.com