CANBERRA: Foreign-exchange trading declined in Japan and Australia in April, as the Federal Reserve’s signals that U.S. interest rates would increase gradually eased price swings.
Daily trading in Japan’s capital declined 2.8 percent to $362.7 billion, compared with October 2014, the Tokyo Foreign Exchange Market Committee reported Monday on its website. Australia’s volume dipped 4 percent to $135.9 billion in April, according to the Australian Foreign Exchange Committee.
Volatility is showing signs of abating as central banks reassert their commitment to predictable policies while global growth slows. JPMorgan Chase & Co.’s Global FX Volatility Index has fallen after surging to a 19-month high on Jan. 16, the day after the Swiss National Bank scrapped its three-year policy of capping the franc against the euro.
“Volatility may have had something to do with the reduction in volume,” said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. “You saw monetary policy stagnation in all the major central banks at that period in time.”
Trading in the yen versus the U.S. dollar declined 1.4 percent, even as such trades accounted for more than half of all transactions, while euro-yen trading climbed 24 percent, the Tokyo data showed. Transactions for the Australian dollar versus the greenback accounted for 44 percent of total average daily volumes in the South Pacific nation.
The Aussie appreciated 4 percent in April, after sliding 14 percent during the previous five months, while the yen rose 0.6 percent for April.
Foreign-exchange trading in the U.S. and U.K. had climbed to records in October, reports in January from the nations’ central banks showed, as American monetary policy diverged from that in Europe and Japan. The data showed that average daily currency turnover in North America jumped 36 percent to $1.1 trillion, compared with April 2014 while U.K. volumes expanded 13 percent to $2.7 trillion.
Electronic trading in Japan dropped 19 percent to $161.9 billion a day, or just 45 percent of transactions, after accounting for more than half in October.
The reports are based on surveys of financial institutions that participate in the currency markets. The committees collaborate with each other to release their surveys on the same day, according to the U.S. group, which was formed in 1978.
