Global FX markets when hedging takes centre stage
Global foreign exchange market turnover hit a record $9.5 trillion per day in April 2025, up 27 percent from 2022, driven by US dollar weakness after surprise US tariffs. The 2025 BIS Triennial Central Bank Survey shows investors, especially non-bank financial firms, rushed to hedge risks using forwards and options, with options trading more than doubling. Dealers increasingly internalized trades, keeping markets stable. Emerging market currencies, especially the Chinese renminbi, gained influence amid these shifts.
What it examines
This paper analyzes global foreign exchange (FX) market trends using BIS survey data, focusing on the surge in trading volumes in April 2025. It examines how monetary policy tightening, market volatility, and hedging needs influenced FX spot, forwards, options, and swaps trading among banks and financial institutions.
What it concludes
The study finds that FX markets acted as shock absorbers during volatility, with increased internal risk management and hedging. These insights help investors, banks, and policymakers understand market resilience, guide risk management strategies, and inform future research on FX market structure and the impact of global events.
Evidence objects
Global FX market turnover hit a record $9.5 trillion per day in April 2025, surging 27% since 2022, fueled by US dollar depreciation and volatility after unexpected US tariff announcements.
key_findings bullet 1 · key_findings · validation V0
Investors, especially non-bank financial institutions, rapidly increased hedging with forwards and optionsoptions trading more than doubledwhile dealers internalized trades, stabilizing markets despite turmoil, according to the 2025 BIS Triennial Central Bank Survey.
key_findings bullet 2 · key_findings · validation V0
The study spotlights rising internalized, non-visible trading and the growing influence of emerging market currencies, notably the Chinese renminbi, but notes the need for deeper analysis of long-term risks and effects.
key_findings bullet 3 · key_findings · validation V0
This paper offers a comprehensive, timely empirical analysis of global FX market turnover, focusing on the effects of US tariff announcements and monetary policy tightening. While it employs established methods and extends existing knowledge, its originality lies in detailed hedging and intragroup trading insights, making it relevant for FX, market microstructure, and risk management.
key_findings bullet 4 · key_findings · validation V0
Raw abstract and provenance
- … Turnover in global foreign exchange (FX) markets … the-counter (OTC) foreign exchange (FX) spot and derivatives … examines recent trends in FX trading volumes and market …
Source row: 993 · abstract type: snippet