NZ dollar keeps spot as world's 10th most traded currency

The New Zealand dollar has retained its position was the worlds' 10th most actively traded currency. Photo / NZ Herald.

The New Zealand dollar remains the tenth most traded currency globally, according to a survey compiled by the Bank of International Settlements (BIS).

The triennial survey took place in April and involved central banks and other authorities in 53 jurisdictions and close to 1300 banks and other dealers.

The Kiwi has held the number 10 spot since 2010.

The US dollar retained the number one spot - being on one side of 88 per cent of all foreign exchange (FX) trades – followed by the euro and the Japanese yen respectively, BIS said.

Reserve Bank assistant governor and general manager of economics, financial markets and banking, Christian Hawkesby, said New Zealand has had a high FX turnover to GDP ratio throughout history which has been attributed to the ability of non-residents to freely trade directly in the currency as well as in New Zealand dollar-denominated financial instruments.

"The BIS survey is an interesting exercise which highlights that although our economy is relatively minor compared to the survey participants we are ranked against, the NZ dollar is traded with a disproportionate frequency in global FX markets," Hawkesby said in a statement.

Trading in foreign exchange markets reached US$6.6 trillion per day in April 2019 according to BIS figures, up from US$5.1 trillion three years earlier.

FX trading continues to be concentrated in the world's largest financial centres; the United Kingdom, the United States, Hong Kong SAR, Singapore and Japan where 79 per cent of all foreign exchange trading takes place.

New Zealand's foreign exchange market handled an average of US$9.5 billion per day in April 2019, down from US$10.6b in April 2016.

The most common currencies traded daily in New Zealand are the US dollar (US$8,335 million), NZ Dollar (US$7,241m), Australian dollar (US$1,343m), Japanese yen (US$399m), euro (US$622m) and the British pound (US$277m).

The survey also captured over-the-counter interest rate derivatives, which averaged US$6.5 trillion daily in April 2019, up markedly from $2.7 trillion at the time of the April 2016 survey.

The increase has been attributed to increased hedging and positioning amid shifting prospects for growth and monetary policy. - Staff Reporter