Singapore Displaces Japan as Asia’s Leading FX Hub

Singapore has overtaken Japan to become Asia’s biggest foreign exchange (FX) centre for the first time thanks to a surge in trading over the past three years, the city state’s central bank said, citing a survey by the Bank for International Settlements (BIS).

Singapore’s average daily FX volume increased 44% to US$383bn as of April this year, against US$266bn in April 2010 according to a statement by the Monetary Authority of Singapore (MAS). It added that the average interest rate derivatives volume climbed 6% to US$37bn over the same period, the highest in the region after Japan.

Singapore’s increase in ranking puts it behind only the UK and US in the US$6.67 trillion global FX trading market, according to the BIS survey.

Khoon Goh, a senior currency strategist at Australia & New Zealand Banking Group (ANZ) in Singapore, said before the release of the statement that Singapore had definitely established itself as a hub for FX trading. “Part of this emergence is due to the increasing importance of Asian currencies, and Singapore’s time zone is well-suited for that.”

“Our growing strength in FX is a key complement to the development of capital market and asset management activities,” Jacqueline Loh, deputy managing director at the MAS, 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.”

FAX trading worldwide surged to an average US$5.3 trillion a day in April 2013 boosted by greater Japanese (JPY) volumes, the BIS said, representing a 33% increase in three years. The JPY had the biggest jump in trading activity among major currencies, while the euro’s role as the second-most traded currency was reduced.

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