Foreign-exchange volumes fell in the U.S., the U.K. and Singapore in October from six months earlier amid a slide in trading of the dollar against the yen and as concern a partial shutdown of the U.S. government would hamper the global economy pushed volatility to the lowest since 2012.
Average daily currency-market turnover in the U.S. was $816 billion in October, a 19 percent slide from April, the Foreign Exchange Committee reported in a twice-yearly survey. Volume in the U.K. declined to $2.23 trillion in October, a 12 percent decline from April, the Bank of England’s Foreign Exchange Joint Standing Committee said. Singapore currency trading fell 14.7 percent to $282 billion, the Singapore Foreign Exchange Market Committee reported.
The JPMorgan Chase & Co. Group of Seven Volatility Index fell to 7.51 percent on Oct. 24, the lowest since Dec. 20, 2012.
“There was a lot of uncertainty regarding the U.S. government shutdown and what that meant for the debt ceiling, and we saw a lot of negative effects ripple through markets overall,” Sireen Harajli, a strategist at Mizuho Bank Ltd. in New York, said in a phone interview. “Markets were unsure about next steps, so a lot of people were waiting on the sidelines.”
The U.S. Congress approved a last-minute deal on Oct. 16 that extended budget and debt-limit deadlines into this year following a 16-day closing of much of the federal government as the U.S. approached default.
Authorities on three continents are also examining the foreign-exchange industry as they probe the potential manipulation of currency rates. Royal Bank of Scotland Group Plc has contacted clients telling them it is abandoning some of the benchmarks it will accept orders for, according to a copy of an e-mail seen by Bloomberg News. No one has been accused of any wrongdoing.
Dollar-yen trading fell 36 percent in October versus April, the U.K. committee said in its statement. Turnover in spot foreign exchange tumbled 24 percent to $767 billion per day.
Daily trading in Canada fell 14.8 percent over the same period as its average daily currency turnover declined to $52.3 billion, from $61.4 billion in April, the Canada Foreign Exchange Committee said.
Australian currency-trading declined 7 percent from April to October to $168.6 billion, the Australian Foreign Exchange Committee reported.
The reports are based on surveys of financial institutions that participate in the currency markets. The committees collaborate with each other and release their surveys at the same time, according to the U.S. group, which was formed in 1978 and is sponsored by the Federal Reserve Bank of New York.