Today, Banco de Portugal releases in Tables the results of the Triennial Central Bank Survey of Foreign Exchange and Over-the-counter (OTC) Derivatives Markets in 2019¹. This survey was coordinated by the Bank for International Settlements (BIS) with the participation of several central banks, including Banco de Portugal, and other authorities, covering 53 jurisdictions.

As in previous editions, the survey focused only on OTC transactions in the foreign exchange market (spot transactions, outright forwards, foreign exchange swaps, currency swaps, OTC options and other related products) and in the interest rate derivatives market (forward rate agreements (FRAs), swaps, OTC options and other related products).

In Portugal, the survey covered 50 banks, of which the four largest accounted for around 75% of activity in these markets.

This statistical press release presents the main results of the survey in US dollars, the reference currency established by the BIS. The results correspond to the daily average turnover in April of each reference year. 

Foreign exchange market

In April 2019 daily turnover in the global foreign exchange market stood at USD 6,590 billion, which corresponds to a 30% increase from the USD 5,066 billion recorded in the same period in 2016² (Chart 1).

Conversely, in Portugal the foreign exchange market posted a contraction for the second consecutive three-year period: in April 2019 daily average turnover totalled USD 1,668 millions, 26% less than in April 2016. In this tree-year period, the contraction was mainly due to two factors: (i) approximately half of the Portuguese banks reduced their activity in the foreign exchange market compared with April 2016, and (ii) Portuguese banks with an activity in April 2019 below normal. 

By instrument, the increase in transactions in the global foreign exchange market is common to all types of operations, but particularly spot transactions, foreign exchange swaps (FX swaps) and outright forwards. FX swaps remained the most actively traded instruments worldwide, accounting for 49% of daily average turnover in April 2019 (47% in April 2016). 

In Portugal, transactions declined across all instruments, except for currency swaps, which remained virtually unchanged. As in the global foreign exchange market, FX swaps were also the most actively traded instruments, accounting for 67% of daily average turnover in April 2019 (67% in April 2016).

By geographical location, the United Kingdom continued to lead in terms of daily turnover (USD 3,576 billion), followed by the United States (USD 1,370 billion). These two countries accounted, in April 2019, for approximately 60% of daily average turnover in the global foreign exchange market (56% in April 2016). Of particular note is the marked increase in the United Kingdom from April 2016 (6 percentage points (p.p.)).

Between April 2016 and April 2019, the share of the euro area countries as a whole³ in total turnover worldwide decreased from 8% to 7%.

By currency, in April 2019, the US dollar continued to be the most traded currency4 at both global and domestic level, accounting for 88% and 91% of total turnover in these markets respectively (Chart 2). The euro and the Japanese yen remained the second and third most traded currencies worldwide, although, compared with April 2016, the euro increased marginally its relevance (0.9 p.p.) while the importance of the yen decreased by 4.8 p.p.

In Portugal, the euro remained the second most traded currency, used in 78% of transactions, with its relative share increasing by 12 p.p. from April 2016. The use of the yen was at its lowest, in relative terms, since April 2004.

Chart 1 – Foreign exchange market, by instrument (daily average transactions in April)

Sources: BIS and Banco de Portugal.

Interest rate derivatives market 

In April 2019 a daily average of USD 6,501 billion was traded in the global interest rate derivatives market. Compared with April 2016, market activity increased by 143% (USD 3,824 billion).

In Portugal, however, turnover decreased by 32%, with daily average turnover of USD 170 million (USD 249 million in April 2016). 

By instrument, swaps remain the most popular instruments worldwide, followed by forward rate agreements, with 64% and 29% of daily average turnover respectively (Chart 3).

In Portugal, although daily average turnover in swaps has decreased from April 2016, the relative share of this instrument increased considerably (13 p.p., to 93%) for the second consecutive three-year period, mostly due to the reduction in activity in forward rate agreements.

By geographical location, in April 2019 the United Kingdom and the United States continued to account for most turnover worldwide, representing around 82% of the daily average (USD 3,670 and 2,356 billion respectively). However, compared with April 2016, the relative positions of these countries have changed: the share of the United Kingdom increased by 11 p.p. while that of the United States decreased by 9 p.p. 

In the euro area Member States as a whole, daily average turnover totalled USD 256 billion in April 2019. The relative importance of this aggregate declined from 8% in 2016 to 4% in 2019.

By currency, worldwide, in April 2019 the US dollar continued to be the most traded currency in interest rate derivatives transactions (Chart 4). 

In Portugal, interest rate derivatives transactions denominated in euro accounted for a relative share of approximately 87%. The share of interest rate transactions in US dollars (12%) increased by 9 p.p. from April 2016. 

Chart 3 – Interest rate derivatives market, by instrument (daily average transactions in April)

Sources: BIS and Banco de Portugal.

Chart 4 – Interest rate derivatives market, by currency (daily average transactions in April)

Sources: BIS and Banco de Portugal.

Next update (to be confirmed): 2022