London FX Volume Shows Massive Drop in April 2020


London FX volume dropped in April 2020 from October 2019, according to the FXJSC turnover survey conducted by Bank of England.

11 August 2020 | AtoZ Markets – The Bank of England (BOE) announced the key results of its April 2020 foreign exchange joint standing committee (FXJSC) turnover survey. The April survey covered the coronavirus panic peak when liquidity shrank in most markets. Twenty-eight financial institutions operating in the UK foreign exchange market participated in the survey, conducted twice a year by the Central Bank of England in spring and autumn.

London FX Volume Drops to $2.4 Trillion Per Day in April 2020

The UK’s average daily foreign exchange trading volume reported was $2.412 trillion in April 2020, 16% fall from October 2019 survey and 15% fall from April 2019 survey. However, UK currency trading reached a record high in October 2019.

The survey found that average daily trading volume fell for instrument types, counterparty types, and execution methods for major currency pairs compared to the October 2019 survey.

The US dollar, Australian dollar, New Zealand dollar, Canadian dollar and Swedish-Norwegian crown has slightly fallen on average daily trading volume. However, Euro, Japanese Yen, Swiss Franc, and Chinese Yuan fall significantly than the previous survey.

EURGBP fall by $24.7 billion (-31%), while the average daily trading volume of the GBPUSD decreased by $138 billion (32%). USDJPY returned to the second most traded currency pair with an average daily trading volume of $313.5 billion. But, it declined by 6% compared to October 2019.

UK FX swaps and currency swaps had the highest relative decline, with daily trading volumes down 20% and 37%, respectively. However, compared to the previous year, swap trading volume increased by 5%.

Spot transactions fell 10% to $677 billion compare to $754 billion in October, the BOE’s report said. Compared to April 2019, there were similar declines in spots (-14%) and FX swaps (-17%). FX options and Non-Deliverable Forward (NDF) also fell compared to the April 2019 survey.

The economy has been shocked since the beginning of the coronavirus (COVID-19) pandemic. Volatility surged, and liquidity shrank in most markets, including foreign exchange during the pandemic. Coronavirus (COVID-19) had a significant and widespread negative impact during April 2020.

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