Currency distribution of otc foreign exchange turnover

The distribution of currency in the over-the-counter (OTC) foreign exchange market refers to the percentage of the total daily turnover that each currency accounts for. It provides insight into the relative importance of different currencies in the global financial market.

According to the Bank for International Settlements (BIS), the top five currencies accounted for approximately 84% of the average daily turnover in the OTC foreign exchange market in 2021. These currencies are:

1. The US Dollar (USD): The US dollar is the dominant currency in the forex market, accounting for about 80% of the daily turnover. This is due to the US dollar’s status as the world’s reserve currency, as well as the currency of the world’s largest economy.
2. The Euro (EUR): The euro is the second-largest currency in the forex market, accounting for about 39% of the daily turnover. The euro is the currency of the European Union, which is the largest trading bloc in the world.
3. The Japanese Yen (JPY): The Japanese yen is the third-largest currency in the forex market, accounting for about 18% of the daily turnover. The yen is the currency of Japan, which is the third-largest economy in the world.
4. The British Pound Sterling (GBP): The British pound is the fourth-largest currency in the forex market, accounting for about 12% of the daily turnover. The pound is the currency of the United Kingdom, which is a major trading partner with many countries around the world.
5. The Swiss Franc (CHF): The Swiss franc is the fifth-largest currency in the forex market, accounting for about 8% of the daily turnover. The franc is the currency of Switzerland, which is a major financial center and home to many international banks and financial institutions.

These five currencies are considered the most actively traded in the OTC foreign exchange market, but there are many other currencies that are also traded, including the Australian dollar, Canadian dollar, Chinese yuan, and others. The distribution of currency in the forex market can change over time, depending on economic and geopolitical factors.

In conclusion, the distribution of currency in the OTC foreign exchange market reflects the relative importance of different currencies in the global financial market. The US dollar, euro, Japanese yen, British pound, and Swiss franc are the most actively traded currencies, accounting for the majority of the daily turnover. However, the distribution can change over time, and traders should monitor the market closely to stay informed of any changes.