The Extraordinary Size of the Foreign Exchange Markets
The Extraordinary Size of the Foreign Exchange Markets
The quantities traded in foreign exchange markets are breathtaking. A survey done in April, 2013 by the Bank of International Settlements, an international organization for banks and the financial industry, found that $5.3 trillion per day was traded on foreign exchange markets, which makes the foreign exchange market the largest market in the world economy. In contrast, 2013 U.S. real GDP was $15.8 trillion per year.
This table shows the currencies most commonly traded on foreign exchange markets. The foreign exchange market is dominated by the U.S. dollar, the currencies used by nations in Western Europe (the euro, the British pound, and the Australian dollar), and the Japanese yen.
Currencies Traded Most on Foreign Exchange Markets as of April, 2013 (Source: http://www.bis.org/publ/rpfx13fx.pdf)
| Currency | % Daily Share |
|---|---|
| U.S. dollar | 87.0% |
| Euro | 33.4% |
| Japanese yen | 23.0% |
| British pound | 11.8% |
| Australian dollar | 8.6% |
| Swiss franc | 5.2% |
| Canadian dollar | 4.6% |
| Mexican peso | 2.5% |
| Chinese yuan | 2.2% |
This lesson is part of:
Exchange Rates and Capital Flows