“This is the year of FX”.
Those of the words of Ollie Jerome, head of FX Europe at Deutsche Bank, as reported by the Financial Times.
The basis for the claim is the surge in forex trading volumes in the wake of Donald Trump’s tariff announcements.
Reporting on Bank for International Settlements study, the paper reveals an average of $9.6tn of daily transactions in April, compared to $7.5tn in the same month three years prior.
While the US President’s ‘liberation day’ announcement increased FX market volatility, the FT points out that increasing volumes of forex trades are not simply a Trump-induced blip: “data underscores the relentless growth of forex volumes in recent decades, and the growing influence that this over-the-counter trading — deals struck privately between banks — has over global financial markets.”
USD on top
This BIS report also reiterates the central role of the US dollar in forex trades, with USD “being on one side of 89% of all FX trades in April 2025”.
The euro and yen are the next most traded currencies.
What form do trades take? The report shows that FX swaps are the most traded instruments.
FX spot turnover increased (up 42% in April 2025 compared to April 2022). Outright forwards increased 60% in the same period.
Dollar depreciation has been an impetus for renewed hedging strategies. As Bloomberg highlights, the BIS report indicates that “the depreciation of the US dollar appears to have led many institutional investors and asset managers with dollar asset exposures to limit further FX losses on their portfolios by selling dollars forward”.
Sterling performance
The BIS report also reveals in increase in turnover in other major currencies. Turnover in sterling increased by 179% and turnover in Japanese yen derivatives increased 684%, respectively.
Trade in yuan, the fifth most traded currency, also increased, with its share in forex trading rising to 8.5% this year.
Could the yuan topple GBP as the fourth most traded currency? It’s not inconceivable, according to some analysts.
“The yuan is rapidly closing in on the pound, as China’s push to internationalise its currency shows progress,” Bank of Singapore FX strategist Moh Siong Sim said.
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