UPDATE 2-FX volume in US, UK drops in October, but up in Asia-survey

Tue Jan 29, 2013 12:57pm EST

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NEW YORK Jan 29 (Reuters) - Daily currency volume in the world's largest foreign exchange centers posted mixed results with drops in the United States, United Kingdom and Canada, but gains in Japan, Singapore, and Australia, a biannual survey from major central banks released on Tuesday showed.

A euro zone debt crisis which drove down volatility and low interest rate regimes around the world have reduced forex transactions in the Western Hemisphere, analysts said, although these factors didn't seem to affect turnover in the Asia-Pacific region.

In North America, total volume was $793.5 billion in October 2012, down 7.7 percent from April. That was also 18.8 percent lower than a year earlier. The New York Federal Reserve-sponsored Foreign Exchange Committee (FXC) said the October volume reflects disruptions related to Superstorm Sandy.

Data on North American volume came from 25 active financial institutions in the country.

Spot transactions posted the sharpest decline among all forex instruments in the U.S., sliding 32.7 percent year-on-year to $381.1 billion. Only forward transactions showed an increase, rising 6.1 percent to $143.6 billion in October.

The fall in volume was also most pronounced for transactions involving the euro versus the U.S. dollar, the FXC said. Declines in deals on euro/dollar accounted for roughly two-thirds of the overall decrease in daily turnover.

The euro for most of last year traded within very narrow ranges as the European Central Bank undertook measures to combat the region's debt crisis. That resulted in lower volatility and limited profit opportunities.

In the UK, the average daily turnover fell 5 percent in October from the April level to hit its lowest since October 2010, a Bank of England survey of 30 financial institutions showed.

Average daily turnover of spot, outright forwards, non-deliverable forwards, swaps, foreign exchange options and currency swaps totaled $1.919 trillion, down from $2.014 trillion in April and a 7 percent drop from the same period in 2011, the BoE said.

The UK is the largest currency market in the world.

Spot foreign exchange activity fell 6 percent to $678 billion per day from $719 billion in April.

CLS VOLUME DATA

The results in the U.S. and UK were consistent with volume data from foreign exchange settlement system CLS Bank. CLS data on Tuesday showed global average traded values in spot, swaps and forwards were down 7 percent than a year earlier. But it rose 4 percent in October to $1.713 trillion from April's $1.65 trillion.

Major governments around the world have responded to the global financial crisis by reducing interest rates to their lowest levels, damaging risk appetite and carry trade transactions. Banks -- especially the smaller ones or non-dealers -- and most buyside participants as a result stepped away from the currency market.

In Canada, the average daily foreign exchange volume slid 14.4 percent to $51 billion in October from $59.6 billion in April. Spot foreign exchange transactions declined 23 percent from the April level. The Canadian survey took volume data from the country's top seven banks.

It was a different story in the Asia-Pacific world.

In Tokyo, daily foreign exchange volume edged up 6.3 percent to $300.5 billion in October from $282.6 billion in April, based on a survey of 19 major banks in Japan.

Spot and forward transactions fell 9.1 percent and 1.2 percent respectively from the April figures, but forwards showed a sharp 25.1 percent increase in October.

In Singapore, daily turnover grew 5 percent in October to $53.9 billion, compared with $51.3 billion in April, data showed from the top 30 financial institutions in the country.

The total monthly volume was $2 trillion, up 7 percent from April's $1.88 trillion turnover.

Finally in Australia, the average daily volume was $186 billion, up 6 percent from the April level and 12 percent higher than a year earlier. The data was drawn from 25 financial institutions in the country.

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