FX poll 2008: FX moves to centre stage

THE RESULTS OF the 2008 Euromoney FX poll may be taken as further proof that the foreign exchange market is in the rudest of health. According to the poll, reported turnover in 2007 rose 40% to $175 trillion from $125 trillion in 2006. Of course, the numbers are backward-looking and few would disagree that the FX market experienced an unexpected bout of frenzied activity in the wake of the sub-prime credit crisis. As a consequence, volumes surged through the summer of 2007, rather than ebbing away as they traditionally do through the holiday season; activity then remained high all the way through to the year-end.

The evidence suggests that so far in 2008 there has been no let-up in trading. Discussion with several sell-side market participants suggests that activity in the first quarter is about 40% higher than it was in 2007. Hard evidence for this is provided by Icap, which reported that turnover on its EBS spot platform rose 41% in the first quarter of 2008.