The evolution of trading activity in Asian foreign exchange markets

Yosuke Tsuyuguchi and Philip Wooldridge

No 252, BIS Working Papers from Bank for International Settlements

Abstract: The development of Asian foreign exchange markets has progressed appreciably in recent years. Data from the BIS Triennial Central Bank Survey indicate that the turnover of Asian currencies rose sharply between 2004 and 2007, financial institutions became more important customers, and the participation of non-residents increased. Notwithstanding this progress, the liquidity of Asian foreign exchange markets continues to be undermined by foreign exchange controls. For Asian currencies other than HKD and SGD, non-residents account for a relatively small share of activity and FX swap markets are still in their infancy. Offshore non-deliverable markets have developed in response to controls, causing trading activity to fragment. Furthermore, Herstatt risk remains high in Asian foreign exchange markets. Almost all transactions between Asian currencies are executed via the US dollar so, for those trades not cleared through CLS Bank, each leg is settled at significantly different times.

Keywords: foreign exchange; trading volume; currency controls (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-05
New Economics Papers: this item is included in nep-ifn and nep-sea
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Citations: View citations in EconPapers (17)

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Journal Article: The evolution of trading activity in Asian foreign exchange markets (2008)
Working Paper: The evolution of trading activity in Asian foreign exchange markets (2008)
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