The foreign exchange market, or forex, is the largest and most liquid financial market in the world. It operates 24 hours a day, 5 days a week, and has a daily turnover of over $5 trillion. The euro is one of the most commonly traded currencies in the forex market, and its daily transactions make up a significant portion of the market’s total volume.
The euro is the official currency of the Eurozone, which consists of 19 European Union member states. It was introduced in 1999 as an electronic currency and later became physical in 2002. Today, the euro is the second most traded currency in the forex market, after the US dollar. It is also a reserve currency, which means that central banks and other financial institutions around the world hold it as part of their foreign exchange reserves.
The average level of daily forex transactions for the euro is difficult to measure precisely because the forex market is decentralized, meaning that there is no centralized exchange or clearinghouse. Instead, forex transactions are conducted over-the-counter (OTC) through a network of banks, brokers, and other financial institutions. However, the Bank for International Settlements (BIS) conducts a triennial survey of the forex market, which provides valuable insights into the size and structure of the market.
According to the latest BIS survey, which was conducted in 2019, the average daily turnover of the euro in the forex market was $1.6 trillion. This represents approximately 31% of the total daily turnover of the forex market, which was $6.6 trillion. This means that the euro is the second most traded currency in the forex market, after the US dollar, which accounted for 88% of the total daily turnover.
The BIS survey also provides information on the different types of forex transactions that take place in the market. The most common type of transaction is spot trading, which involves the immediate exchange of currencies at the current market price. According to the BIS survey, spot trading accounted for 48% of the total daily turnover of the forex market in 2019. The euro was involved in 32% of all spot transactions, which means that it is a popular currency for immediate exchange.
Another type of forex transaction is forwards, which involve the exchange of currencies at a future date at a predetermined price. Forwards are often used by businesses and investors to hedge against currency risk or to speculate on future exchange rate movements. According to the BIS survey, forwards accounted for 29% of the total daily turnover of the forex market in 2019. The euro was involved in 26% of all forward transactions, which indicates that it is also a popular currency for hedging and speculation.
Other types of forex transactions include swaps, options, and other derivatives. These are more complex financial instruments that are used by banks and other financial institutions to manage their currency exposures and to generate profits. The BIS survey found that swaps accounted for 21% of the total daily turnover of the forex market in 2019, while options and other derivatives accounted for 2%.
In conclusion, the average level of daily forex transactions for the euro is approximately $1.6 trillion, which represents approximately 31% of the total daily turnover of the forex market. The euro is a popular currency for spot trading, forwards, swaps, and other derivatives, and is the second most traded currency in the forex market after the US dollar. While the forex market is decentralized and difficult to measure precisely, the BIS survey provides valuable insights into the size and structure of the market, which are essential for understanding the global economy and financial system.
