Overnight the Bank of International Settlements (BIS) released the first pass of its triennial survey on foreign exchange.
It was conducted in April and showed a huge spike in turnover – $5.3 trillion per day, up from $4 trillion per day in 2010, and $3.3 trillion in 2007.
Some of the key takeaways are:
– the BRICs are climbing the league tables of daily turnover with a bullet as they account for a growing share of daily trade,
– the Chinese Renmimbi climbed into the top 10 for the first time, and
– the Mexican Peso managed to clamber back inside the top 10 for the first time since the Asian and Rusian Ruble crisis back in the late 1990’s.
While the Aussie dollar comes in 5th for overall Foreign Exchange turnover – remarkable in itself given the size of the Australian economy on a global basis – the real stunner is the continued growth in the AUDUSD FX pair over the past 12 years to be the fourth most actively traded Currency pair on the globe.
Back in the 2001 survey, the daily turnover of the Australian dollar was $51 billion per day, according to the BIS. But in April this year it had risen to a whopping $364 billion per day compared to $200 billion for the Canadian dollar and $184 billion for the Swiss franc. Trade in both these currencies was larger than the Aussie dollar in 2001.
Most interesting though, and something which shows the globalisation of Aussie dollar trading, is the data shows the amount of FX turnover that occurs in Australia has slipped back to 2.7% from a high of 4.1% in 2004 and 2007.
That means quite a bit of the Australian dollar’s influence and activity is driven from offshore.
The size, scale and prominence of Aussie dollar trade underlies the place the Australian dollar plays in investors’ and traders’ portfolio as the world’s favourite growth punt. Traders and investors just love to use it as a proxy for bets on global and emerging markets growth.
The big question going forward is whether the rise of the Chinese Renmimbi and the re-emergence of the Mexican Peso will see investors proxying the Aussie dollar for growth as much as they have in the past.
Greg McKenna is an active currency trader – he is short AUD at the moment.