The turnover of FX swaps rose further, reaching $2.4 trillion per day in April 2016. "This rise was driven in large part by increased trading of FX swaps involving yen," the report noted. A foreign exchange "spot transaction" is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on a set date (either immediately or soon thereafter).
An FX "swap agreement" is a contract in which one party borrows one currency from, and simultaneously lends another to, the second party, the BIS explains, creating a form of "risk-free collateralized borrowing/lending."
The latest survey, which sheds light on the size and structure of global foreign exchange (FX), showed that the U.S. dollar remained the dominant vehicle currency, being on one side of 88 percent of all trades in April 2016. The euro, yen and Australian dollar all lost market share. In contrast, many emerging market currencies increased their share.
The renminbi doubled its share, to 4 percent, to become the world's eighth most actively traded currency and the most actively traded emerging market currency, overtaking the Mexican peso.
The rise in the share of renminbi was primarily due to the increase in trading against the U.S. dollar. In April 2016, as much as 95 percent of renminbi trading volume was against the U.S. dollar involved the participation of central banks and other authorities in 52 jurisdictions, the BIS stated.
The survey collects data from close to 1,300 banks and other dealers in their jurisdictions and reported national aggregates to the BIS, which then calculated global aggregates.
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