Numerical proof of how tough the foreign exchange market was for many participants through the summer of 2006 has been provided by semi-annual volume data released by the Federal Reserve Bank of New York’s Foreign Exchange Committee and the Bank of England’s FX Joint Standing Committee. According to the FXC, average daily volume in over-the-counter FX instruments in October 2006 totalled $534 billion, 7.5% down on April 2006.
The London market managed to report a volume increase as it reinforced its status as the dominant centre for FX trading, although the rate of growth also slowed. According to the JSC, average daily FX volume was $967 billion in October 2006, up 6% on April 2006. Given that the market was virtually stagnant, the figures can be taken as evidence of the overall health of the FX market.
As Richard Mahoney, chair of the FXC, pointed out, the market had increased year on year. “After record-high trading volumes this past spring, we have seen a slight drop in average daily volume since our last survey. However, volume levels across the board are still significantly higher than they were a year ago,” he said.