The forex market, also known as the foreign exchange market or currency market, is the largest financial market in the world with an average daily trading volume of over $5 trillion. The market operates 24 hours a day, five days a week, and allows individuals, institutions, and governments to buy and sell currencies from around the world.
In 2020, the forex market remained a crucial component of the global financial system despite the COVID-19 pandemic’s impact on the world economy. The market’s size and liquidity make it an attractive option for investors, traders, and speculators. The forex market’s worth in 2020 was estimated to be approximately $2.4 quadrillion, according to the Bank for International Settlements (BIS) triennial survey.
The BIS survey, conducted every three years, provides a comprehensive analysis of the global foreign exchange market. The latest survey conducted in 2019 revealed that the forex market’s daily turnover had increased by 29% since the last survey conducted in 2016. The survey also noted that the US dollar remains the dominant currency in the forex market, accounting for approximately 88% of all transactions.
The forex market’s worth is determined by the volume of currency transactions that occur daily. This volume is influenced by factors such as economic growth, geopolitical events, interest rates, and central bank policies. In 2020, the COVID-19 pandemic had a significant impact on the forex market, with many countries implementing lockdowns and other measures to curb the spread of the virus.
The pandemic caused a global economic slowdown, affecting the forex market’s volatility and trading volume. However, central banks and governments worldwide implemented measures to stabilize financial markets and support economies, which helped to limit the forex market’s decline.
The forex market’s worth is also influenced by the growth of technology and the rise of online trading platforms. Advances in trading technology have made it easier for individuals and institutions to access the forex market, leading to increased participation and trading volume.
Additionally, the forex market’s worth is influenced by the development of new financial products and instruments, such as currency futures and options. These products allow traders and investors to hedge their currency exposure and speculate on currency movements, leading to increased trading volume and liquidity.
In conclusion, the forex market’s worth in 2020 was estimated to be approximately $2.4 quadrillion, according to the BIS triennial survey. The market remains a key component of the global financial system, providing individuals, institutions, and governments with a platform to buy and sell currencies from around the world. The forex market’s worth is influenced by various factors, including economic growth, geopolitical events, and the development of new financial products and technology. Despite the COVID-19 pandemic’s impact on the world economy, the forex market remained resilient in 2020, with central banks and governments implementing measures to stabilize financial markets and support economies.
