Foreign exchange trading volumes hit an impressive 10 trillion per day amid the chaos following Donald Trump’s recently announced tariffs, underscoring the increasing significance of currency markets in global volatility.
A new report from the International Bank for Reconciliation indicates that trading activity surged from 7.5 trillion three years ago to an average daily volume of 9.6 trillion in April.
This data reflects the persistent growth in foreign exchange transactions over recent decades, particularly as these dealings increasingly occur directly between banks, outpacing the global financial market. The UK continues to be a dominant player in forex, with 38% of trading activity recorded in April.
The Bank for International Settlements (BIS) report, which compiled information from over 1,000 banks and dealers, observed “an increase in FX volatility and heightened trading activities following trade policy announcements” in its preliminary analysis released on Tuesday.
April was marked by particular volatility due to the uproar surrounding Trump’s tariff declarations.
The leading portion of monthly trading volume comprised forex swaps—contracts that exchange currencies for future dates—contributing 4 trillion to daily transactions.
BIS had earlier categorized forex swaps as a critical connector between currency and government bond markets, significantly contributing to the internationalization of government bonds since the last financial crisis.
The report also pointed out a significant increase in currency hedging by global investors this year, as the US dollar faced its worst beginning in decades, boosting activity among Wall Street banks.
The proportion of forwards, instruments used by investors to secure future exchange rates, rose to 19% of sales, up from 15% three years prior. Additionally, the volume of forex options, another common currency trading method, more than doubled, now accounting for 7% of transactions.
Despite these trends, the report reaffirmed the US dollar’s dominance in the forex market, appearing on one side of 89% of trades, a slight increase from 88% three years ago, while trade shares for the euro and sterling declined marginally.
Interestingly, in the interest rate derivatives market, contracts stated in euros began to surpass those issued in dollars, according to BIS data.
