Singapore overtook Japan as Asia’s
biggest foreign-exchange center for the first time as trading
surged in the past three years, the city’s central bank said,
citing a survey by the Bank for International Settlements.
The city’s average daily foreign-exchange volume increased
44 percent to $383 billion as of April from $266 billion in the
same month in 2010, the Monetary Authority of Singapore said in
a statement yesterday. The average interest-rate derivatives
volume climbed 6 percent to $37 billion over the same period,
the highest in the region after Japan, it said.
“Singapore has definitely established itself as a hub for
foreign-exchange trading,” Khoon Goh, a senior currency
strategist at Australia New Zealand Banking Group Ltd. (ANZ) in
Singapore, said before the release of the statement. “Part of
this emergence is due to the increasing importance of Asian
currencies, and Singapore’s time zone is well-suited for that.”
The Chinese yuan entered the top 10 most-actively traded
currencies, according to the Bank for International Settlements
or BIS. Singapore’s increase in ranking puts it behind only the
U.K. and U.S. in the $6.67 trillion global foreign-exchange
trading market, the BIS said.
The city’s currencies trading expanded as the government
offered incentives to boost its financial markets, which also
led to a surge in the nation’s fund management industry, where
more than 500 asset managers oversee about $1.1 trillion.
Growing Strength
“Our growing strength in foreign exchange is a key
complement to the development of capital market and asset
management activities,” Jacqueline Loh, deputy managing
director at the Monetary Authority of Singapore, said in the
statement. “It will also better position our financial center
to serve the investment and risk management needs of financial
institutions and corporates throughout Asia.”
Foreign-exchange trading worldwide surged to an average
$5.3 trillion a day in April 2013, boosted by greater yen
volumes, the BIS said. Trading increased 33 percent since the
same period in 2010, the organization said, citing a survey of
currency traders it runs every three years. The yen had the
biggest jump in trading activity among major currencies, while
the euro’s role as the second-most traded currency was reduced.
The yuan was the ninth-most traded currency, up from 17th
three years earlier, according to the BIS.
‘Prominent Trend’
“This is the beginning of what we can expect to be a very
prominent trend,” Sacha Tihanyi, a senior currency strategist
at Scotiabank in Hong Kong, wrote in an e-mailed note to clients
today. The next survey will probably show a greater increase in
yuan trading as a proportion of global turnover, according to
Tihanyi.
While trading increased in Singapore, the city’s currency
was ranked 15th, down three notches from 2010, according to the
BIS. It was the seventh most-traded currency in 1998.
Foreign-exchange trading in Singapore is one-seventh the
size of that in the U.K. and less than a third of the U.S.
total. The U.K. has 41 percent of the global market, followed by
the U.S. with 19 percent, according to the BIS, which is the
record-keeper of the world’s central banks. Singapore has a 5.7
percent share, followed by Japan’s 5.6 percent and Hong Kong’s
4.1 percent.
“Foreign-exchange market activity has become ever more
concentrated in a handful of global financial centers,” the
Basel, Switzerland-based BIS said in its report yesterday. “The
vast majority of global FX trading in 2013 has occurred via the
intermediation of dealers’ sales desks in five jurisdictions.”
Japan ‘Rejuvenation’
While Japan’s share of foreign-exchange trading dropped,
yen transactions jumped 63 percent between 2010 and 2013, the
biggest increase in activity among major currencies, according
to BIS data. Yoshihide Suga, the chief cabinet secretary in
Japanese Prime Minister Shinzo Abe’s administration, said the
BIS report showed Tokyo’s financial markets are still growing
and the acceleration of yen trading across the globe.
“The government recognizes that the rejuvenation of the
Japanese economy, including the rejuvenation of markets, is
extremely important,” Suga told reporters in Tokyo today.
The Reserve Bank of Australia said the nation’s currency
remains the fifth-most traded in the world, with its share of
global turnover climbing one percentage point to around 8.5
percent, citing data compiled by BIS. While the Australian
dollar versus the greenback remains the fourth-most traded
currency pair, total turnover in Australia’s foreign-exchange
market has declined about 5 percent since April 2010, the RBA
said today in a statement on its website.
Regional Sell-off
The Singapore dollar traded at S$1.28 as of 1:39 p.m. local
time. It has fallen 2.8 percent against the greenback in the
past three months, the smallest drop among key Asian currencies
tracked by Bloomberg, as investors withdrew funds from
developing markets. About $44 billion has been pulled out of
emerging-market stock and bond funds globally since the end of
May, data provider EPFR Global said on Aug. 23.
Foreign-exchange average daily trading volume in Singapore
was $326 billion in April 2013, a 6.2 percent increase from
October 2012, according to a semi-annual survey published by the
Singapore Foreign Exchange Market Committee on July 29.
“The government has also been encouraging more and more
large financial institutions to set operations here,” ANZ
Bank’s Goh said.
Switzerland’s central bank said two months ago it set up a
new Singapore office to ease round-the-clock management of its
exchange-rate cap, end the need for the Zurich trading desk’s
night shift and help manage its investments in Asia. Singapore’s
position as a regional bond-trading center led to its selection
for the first foreign branch in the Swiss National Bank’s 106-year history, President Thomas Jordan said July 11.
To contact the reporter on this story:
Kristine Aquino in Singapore at
kaquino1@bloomberg.net
To contact the editor responsible for this story:
Rocky Swift at
rswift5@bloomberg.net
Singapore’s Central Business District
Nicky Loh/Bloomberg
Buildings in the central business district stand illuminated as the sun sets in Singapore. The increase in ranking puts Singapore just behind the U.K. and U.S. in the $6.67 trillion global currencies trading market, according to the Bank for International Settlements or BIS.
Buildings in the central business district stand illuminated as the sun sets in Singapore. The increase in ranking puts Singapore just behind the U.K. and U.S. in the $6.67 trillion global currencies trading market, according to the Bank for International Settlements or BIS. Photographer: Nicky Loh/Bloomberg
Sept. 6 (Bloomberg) — Singapore overtook Japan as Asia’s biggest foreign-exchange center for the first time as trading surged in the past three years, the city’s central bank said, citing a survey by the Bank for International Settlements. Haslinda Amin reports on Bloomberg Television’s “First Up.” (Source: Bloomberg)
Singaporean Dollar
Munshi Ahmed/Bloomberg
The Singapore dollar has fallen 2.2 percent against the U.S. currency in the past three months, the smallest drop among key Southeast Asian nations tracked by Bloomberg as investors withdrew funds from developing countries.
The Singapore dollar has fallen 2.2 percent against the U.S. currency in the past three months, the smallest drop among key Southeast Asian nations tracked by Bloomberg as investors withdrew funds from developing countries. Photographer: Munshi Ahmed/Bloomberg
Singapore Overtakes Japan as Asia"s Top Foreign-Exchange Hub
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