Although few banks strip out the results, Euromoney believes that most of them have recorded bumper profits form their FX activities in 2008. Coming on top of generally solid performances in 2007, many will now be hoping that repeat performances will be seen in 2009.
If ever there was a bad year to have a good year, it is likely to have been 2008. With most other departments suffering badly, the bumper results produced by many FX units are likely to prove a sideshow in what will be a year of write-downs and general value destruction. The chances are that many FX participants will find they have not been rewarded as they think they should. Although this will obviously prove disappointing, in the longer term it should cement the reputation of FX as a proper asset and a realistic business line.
This year might well prove to have been a watershed in FX for several reasons, some of which are not yet fully apparent. Market participants have long believed that FX is an asset in its own right and while it remains true that the currency aspect is often ancillary to a cross-border securities transaction, the market’s overall liquidity should continue to attract new players.