The New Zealand dollar (NZD) remains the tenth 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 53 jurisdictions and close to 1300 banks and other dealers.
The NZD has held the number 10 spot since 2010. 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.
Reserve Bank Assistant Governor and General Manager of Economics, Financial Markets and Banking Christian Hawkesby says New Zealand has had a high FX turnover to GDP ratio throughout history which has been attributed to the ability of non-residents to freely trade directly in the currency as well as in New Zealand dollar-denominated financial instruments.
“The BIS survey is an interesting exercise which highlights that although our economy is relatively minor compared to the survey participants we are ranked against, the NZ dollar is traded with a disproportionate frequency in global FX markets.”
Trading in FX markets reached $6.6 trillion per day in April 2019 according to BIS figures, up from $5.1 trillion three years earlier.
FX trading continues to be concentrated in the world’s largest financial centres; the United Kingdom, the United States, Hong Kong SAR, Singapore and Japan where 79% of all foreign exchange trading takes place.
New Zealand’s foreign exchange market handled an average of US$9.5 billion per day in April 2019, down from US$10.6b in April 2016.
The most common currencies traded daily in New Zealand are the US dollar (US$8335 million), NZ Dollar (US$7241m), Australian dollar (US$1343m), Japanese yen (US$399m), euro (US$622m) and the British pound (US$277m).
The survey also captured over-the-counter interest rate derivatives, which averaged US$6.5 trillion daily in April 2019, up markedly from $2.7 trillion at the time of the April 2016 survey. The increase has been attributed to increased hedging and positioning amid shifting prospects for growth and monetary policy.