Emerging market currencies: the new mainstream?

Thu Jun 24, 2010


Better liquidity is improving these markets' appeal


Tim Sangston of Greenwich Associates says that one visible trend in global foreign exchange trading in recent years has been the growing share of volume accounted for by emerging market currencies. "This year, about 58% of the accounts we interviewed said they were active in emerging market currencies," he says. "That compares with 52% a year ago and about 45% the year before that."

These findings are broadly corroborated by data published by the Bank for International Settlements (BIS) on the currency distribution of reported foreign exchange turnover, although the official figures also underscore how modest these volumes remain in relative terms. The BIS figures are expressed on the basis of a total market of 200% (as both sides of each trade are recorded). Of that total, currencies showing increases that are representative of the global trend include the South African rand (up from 0.3% in 1992 to 1% in...

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