Very strong growth in the Norwegian foreign exchange market
The average daily turnover in the Norwegian foreign exchange market was USD 32 billion in April 2007, an increase of 123% from April 2004. The average daily turnover in the OTC derivatives market was USD 6.7 billion in April 2007, an increase of 31% from April 2004. These are the results of a survey of activity in the Norwegian foreign exchange and OTC derivatives market that Norges Bank conducted in April this year. The survey is part of an international survey organised by the Bank for International Settlements (BIS).
Concurrently with the Norges Bank survey, similar surveys were made in a total of 54 countries. These surveys have been made every three years since 1989. In addition to the turnover survey, a separate survey was made of contracts outstanding at the end of June. The BIS will publish a preliminary report on the amounts outstanding in November 2007.
Strong growth in the forward market, but falling market share for Norwegian krone
Turnover in the forward market increased strongly, by 131.3%, from April 2004 to April 2007. In the spot market, turnover increased by 20.0% during the same period. The turnover in the spot market is now at the same level as in 2001 after a fall from 2001 to 2004.
The US dollar increased its share of turnover from 40.8% in April 2004 to 42.6% in April 2007. The Norwegian krone’s share decreased from 39.0% in April 2004 to 30.7% in April 2007. This year’s survey showed that the euro had a share of 12.7% of total turnover against 13.9% in the previous survey in 2004. Other currencies increased their share from 8.3% in April 2004 to 14.0% in April 2007. Increased trading in Australian dollars and Swedish kroner were the main contributors.
The market share of cross-border trading remained relatively stable at 79.2% in April 2007 against 79.4% in April 2004. Trading with other financial institutions increased from 8.3% in April 2004 to 18.7% in April 2007. The share of transactions between reporting dealers decreased from 76.3% in April 2004 to 67.1% in April 2007.
Increased use of OTC derivatives
Turnover in forward rate agreements (FRAs) increased by 25.7% from April 2004 to April 2007. The share of total turnover in the OTC derivatives market rose to 78.7%. The market share for interest rate swaps was stable at 17.8%, while the share for interest rate options fell from 4.5% in April 2004 to 1.1% in April 2007. Use of foreign exchange options and currency swaps also increased, but these instruments still represent a relatively small share of turnover in the OTC derivatives market.
Preliminary report: Activity in the Norwegian foreign exchange and derivatives market in April 2007 (pdf, 97 kB)
Contact: Jan T. Engebretsen, tlf. 2231 6234