Data Shows US Dollar Still Dominates Forex

Bruce (Australia), Oct 1 (The Conversation) Reports of the death of the US dollar appear to be greatly exaggerated (like that of author Mark Twain).

Global trading in the foreign exchange market has risen to almost USD 10 trillion (AUD 15 trillion) per day. This figure comes from a survey released overnight by the Bank for International Settlements covering transactions in April.

By comparison, global trade in goods and services was around USD 33 trillion in 2024. This amounts to approximately USD 0.1 trillion per day.

So, only around 1 per cent of global foreign exchange trading relates to international trade.

Most foreign exchange trading is therefore not importers buying foreign currency to purchase goods from their suppliers, nor exporters converting revenue into their home currency.

The trading is purely financial transactions: insuring against adverse currency movements or speculating (or, put less kindly, gambling).

April was a crazy month

The average daily foreign exchange turnover of USD 9.6 trillion in April was fuelled by the fallout from President Donald Trump's“liberation day” tariffs. That made it a very volatile month for exchange rates. This may have led to an unusual amount of hedging and speculating in currency markets, with turnover 28 per cent higher than in April 2022.

The survey showed the US dollar remains the dominant currency. It is on one side of 89 per cent of currency transactions.

Well behind are the euro, involved in 29 per cent of trades; the yen, involved in 17 per cent; and the British pound, involved in 10 per cent of foreign exchange transactions.

Trading in the Chinese renminbi is growing fast and now accounts for 8.5 per cent of transactions.

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