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US dollar remains dominant in forex trading

The U.S. dollar continues to be the dominant currency in foreign exchange trading, being used in 88% of all trades, according to the Bank for International Settlements.

The BIS triennial survey revealed volumes returned to growth after declining in the last survey in 2016, hitting $6.6 trillion per day in April 2019. By way of scale, this compares to a total of less than $100 billion per day trade in goods and services in 2018.

"The dollar's dominance reflects its importance as a vehicle and funding currency," said Hyun Song Shin, BIS economic adviser and head of research.

More than half of the rise was accounted for by forex swaps, a form of collateralized borrowing.

Emerging-market growth

The yuan has made little progress as a major currency, remaining the eighth-most significant international currency in forex trading, despite China vying with the U.S. to be the world's largest economy.

Yet, emerging-market currencies as a whole did progress, increasing their share in forex trading to 23%, up from 19% in 2016 and 15% in 2013, with China the biggest player.

There was also a trend toward increased offshore trading, with forex increasingly being concentrated in London, New York, Singapore and Hong Kong. Three-quarters of the total was cleared in these four financial centers in April 2019, up from 71% in 2016 and 65% in 2010.

"Technological innovation, especially the rise in electronic and automated trading, was a major factor behind the increase in offshore trading," Hyun said.