Source: Reserve Bank of New Zealand
28 October 2022 – The NZD has fallen to be the 14th most traded currency globally, according to a global survey compiled by the Bank of International Settlements (BIS) released today.
The triennial survey took place in April and involved central banks and other authorities in 52 jurisdictions and more than 1,200 banks and other dealers.
The NZD had held the number 10 spot since 2010, but has been overtaken by the Singapore dollar, Swedish krona, Korean won and Norwegian krone respectively. The US dollar retained the number one spot — being on one side of 88% of all foreign exchange (FX) trades — followed by the euro and the Japanese yen respectively. The NZD was on one side of 1.7% of all FX trades, or USD$125 billion worth per day. This compares to the NZD being on one side of 2.1% of all FX trades or USD$137 billion worth per day in April 2019.
Reserve Bank Assistant Governor and General Manager of Economics, Financial Markets and Banking Karen Silk says the slide in the New Zealand dollar’s ranking came at a time of heightened FX volatility, with changing interest rate expectations, COVID restrictions, rising commodity prices, and geopolitical tensions following the Russian invasion of Ukraine.
“While being overtaken by some of our peers in a volatile period, the New Zealand dollar continues to trade with a disproportionate frequency relative to the size of the New Zealand economy.”
Trading in FX markets reached USD$7.5 trillion per day in April 2022 according to BIS figures, up 14% from USD$6.6 trillion 3 years earlier.
FX trading continues to be concentrated in the world’s largest financial centres; the United Kingdom, the United States, Singapore, Hong Kong SAR and Japan where 78% of all foreign exchange trading takes place. The United Kingdom remained the most important FX trading location globally, with 38% of global turnover.
New Zealand’s foreign exchange market handled an average of USD$10.6 billion per day in April 2022, up from USD$9.3 billion in April 2019.
The most common currencies traded daily in New Zealand are the US dollar (USD$9.6 billion), New Zealand dollar (USD$8.4 billion), Australian dollar (USD$1.4 billion), British pound (USD$757 million), euro (USD$431 million) and the Japanese yen (USD$243 million).
The survey also captured over-the-counter interest rate derivatives, which averaged USD$5.2 trillion daily in April 2022, down from USD$6.4 trillion at the time of the April 2019 survey. The decline reflected mainly the reduced turnover of forward rate agreements (FRAs) following the transition from the use of Libor as a reference rate at the end of 2021.
More information
BIS Triennial Central Bank Survey: Global foreign exchange market turnover in 2022 release https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=6b20bc070f&e=f3c68946f8
BIS Triennial Central Bank Survey: Global foreign exchange market turnover in 2022 statistics tables https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=1edfeacbb1&e=f3c68946f8
BIS Triennial Central Bank Survey: Interest rate derivatives market turnover in 2022 release https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=fdc3f0c32c&e=f3c68946f8
BIS Triennial Central Bank Survey: Interest rate derivatives market turnover in 2022 statistics tables https://govt.us20.list-manage.com/track/click?u=bd316aa7ee4f5679c56377819&id=aaf438ff9c&e=f3c68946f8
