Rise in Volumes Confirms Forex as Asset Class

Stephen Harris

24 January 2006

A recent sharp increase in volumes of currency trading continuing a trend seen in the last few years is further evidence that currencies are becoming accepted as a distinct asset class by a growing number of investors. Average daily trading volumes in spot foreign-exchange in October 2005 reached $257 billion in London and $212 billion in New York, according to data published by the Bank of England and the Federal Reserve Bank of New York. This is a 24 per cent year on year increase for London and a 13 per cent since April 2005. For New York, it represents a 26 per cent increase versus a year earlier and a 9 per cent rise since April. Hedge funds have been a major contributor to the growth in currency trading volumes. But the data also suggests that foreign exchange is seeing further acceptance among traditional asset managers