Forex Trading Activity Jumps as U.S. Tariffs Increase Volatility, BIS 2025 Triennial FX Survey Says

By Renae Dyer

Global foreign-exchange turnover jumped nearly 30% in April as heightened volatility after President Trump's announcement of sweeping tariffs boosted trading activity, according to the preliminary BIS triennial FX survey for April 2025.

Turnover in over-the-counter forex markets averaged $9.6 trillion a day in April 2025, up 28% from the $7.5 trillion a day recorded in the previous survey for April 2022.

The dollar's falls and the risk of further depreciation due to uncertainty surrounding tariffs and other policies appeared to prompt investors to seek protection against further declines, with the survey showing increased trade in forex forwards and options.

The dollar has weakened almost 10% against a basket of currencies in the year to date, according to LSEG.

The BIS said many institutional investors and assets managers with dollar asset exposures limited further currency losses on their portfolios by selling dollar forwards. This hedging activity contributed to high turnover in outright forwards, which are used to lock in future exchange rates.

Turnover in outright forwards jumped 60% and accounted for 19% of overall turnover, compared with 15% in 2022, the survey showed.

Forex spot turnover increased by 42% and its share of turnover increased to 31% from 28% previously.

Turnover in options--another tool for hedging--more than doubled. Options accounted for 7% of global turnover this year, up from 4% in 2022.

The most traded instrument continued to be forex swaps with an average daily turnover of $4 trillion, up 5% compared with 2022. However, the share of swaps in global turnover fell to 42% this year from 51% in 2022 due to faster growth in other instruments.

The dollar retained its position as the most traded currency by far. It was on one side of 89.2% of all trades, up from 88.4% in 2022.

The euro was the second most traded currency, although its share declined to 28.9% from 30.6% in 2022. This was followed by the Japanese yen with a 16.8% share, little changed since 2019.

In over-the-counter interest rate derivatives, however, euro-denominated contracts surpassed the dollar to command the biggest share of turnover.

Global turnover in interest rate derivatives markets gained 59% to $7.9 trillion a day in April, with euro-denominated contracts accounting for 38%. The dollar's share fell to 31% from 46% as investors shifted away from the currency.

The survey also showed that dealers' trading with 'other financial institutions'--a broad category including nonreporting banks, institutional investors, hedge funds and proprietary trading firms, and official sector financial institutions--accounted for 50% of average daily forex turnover in April 2025, up from 47% in 2022.

Higher turnover in spot and forwards with these counterparties "reflected elevated trading activity amid heightened FX volatility following U.S. tariff announcements in early April 2025," the BIS said.

The Swiss franc's share of global forex turnover increased to 6.4%, rising to the sixth most traded currency from eighth in 2022. The Chinese yuan rose to 8.5% of global turnover.

Meanwhile, sterling's share of global over-the-counter forex turnover fell to 10.2%, below its 13% average over the previous three surveys since 2016. Sterling interest rate derivatives contracts turnover rocketed by 179%, however, and accounted for 12% of global turnover.

Turnover in Japanese yen contracts also surged by 648% and was the fourth most traded currency in interest rate derivatives markets, overtaking the Australian dollar and Canadian dollar. Yen contracts represented 5.2% of global turnover.

The U.K. retained its position as the world's leading forex trading hub with 38% of total turnover, largely unchanged from three years ago. The U.S. was in second place with a 19% share, also little changed. Singapore reported strong growth in trading activity, however, with its share of total forex turnover rising to 11.8% in 2025 from 9% in 2022, the survey showed.

Trading of interest rate derivatives continued to be highly concentrated in the U.K. and the U.S., with a combined share of 73%.

The BIS's survey is conducted every three years and is the most comprehensive source of information on the size and structure of global over-the-counter markets in foreign exchange and interest rate derivatives. It involved central banks and other authorities in 52 jurisdictions, collecting data from more than 1,110 banks and other dealers.

Final data and further analysis will be published by the BIS on Dec. 8.

Write to Renae Dyer at renae.dyer@wsj.com

(END) Dow Jones Newswires

September 30, 2025 09:14 ET (13:14 GMT)