Forex appeal

Figures released by the Bank for International Settlements indicate strong growth in the foreign exchange derivatives market in the past three years. But why has this growth occurred, which market participants have driven it, how dependent is it on volatility in the spot market and is it sustainable in 2005? By Laurence Neville

The first part of the Bank for International Settlements’ (BIS) triennial survey of central banks shows a significant increase in the traditional foreign exchange market over the three-year period, with average daily turnover increasing by 57% to $1.9 trillion in the period, or 36% at constant exchange rates. The survey involved 52 central banks compared with the BIS’s semi-annual reports, which collect data from major dealers in the Group of Ten countries at the end of September and the second