Reply #31: Global Currency Trading Will Grow to $10 Trillion a Day by 2020, UBS Says

[Demeter]

http://www.bloomberg.com/news/2010-10-27/global-currency-trading-will-grow-to-10-trillion-a-day-by-2020-ubs-says.html

Foreign-exchange trading will more than double to $10 trillion a day on average a decade from now, driven by portfolio diversification from central banks, pension funds, hedge funds and insurance companies, according to UBS AG.

Central banks will have a harder time influencing exchange rates because of the market’s size, wrote Mansoor Mohi-uddin, global head of currency strategy at UBS in Singapore. The Bank for International Settlements said in September that currency market volume rose to $4 trillion a day.

“The immense growth of currency markets is likely to draw in investors seeking liquidity to manage large-scale portfolios,” wrote Mohi-uddin in a research report today. “It also means central banks wishing to influence exchange rate levels through intervention will need to act more forcefully to have any sustained impact.”

UBS estimated that the daily turnover in currency markets related to hedge funds, pension funds, mutual funds, insurance companies and central banks rose 42 percent to $1.9 trillion in 2010 from $1.3 trillion in 2007...