ALTHOUGH IT IS too early to say whether the profound changes that have altered global financial markets over the past two years are structural or cyclical, one outcome is that foreign exchange is now regarded even more widely as the proper asset it has always been.
FX, like other markets, had to face big difficulties in 2008. The fact that the turnover reported in the 2009 Euromoney FX poll, which covers the 2008 calendar year, was only marginally higher than in 2008 – $175.3 trillion compared with $175 trillion – might cause some concern and lead some to ask if the growth of FX business has reached a plateau. Realistically though, volumes, which have soared from just $40 trillion in 2005, simply could not have kept increasing at the same rate indefinitely. Encouragingly, the number of buy-side players voting this year has again increased, surging nearly 24% to 12,150. The suggestion is that while increased volatility has led to a reduction in the notional size of positions put on by some risk takers, more people now realize that they have a duty to manage their FX exposures.