Big drop in NZ forex turnover

By Phil Boeyen, ShareChat Business News Editor

Wednesday 10th October 2001

There's been a significant drop in foreign exchange turnover in New Zealand with much of the business lost across the Tasman.

A Reserve Bank survey taken in April this year shows the country's foreign exchange market handled an average of US$4.2 billion per day during that month, 46% lower than in 1998.

Head of Financial Markets, Michael Reddell, says that compares with international data showing an 18% fall in global foreign exchange turnover.

"An increasing share of the foreign exchange business once conducted here is now being done in Australia, and this accounts for much of the difference between the fall in New Zealand's turnover and that seen internationally.

"Of the US$4.2 billion of foreign exchange turnover in New Zealand each day, two-thirds involves the NZ dollar against the US dollar.

"Just over a quarter of the turnover did not involve the NZ dollar at all - for example, around US$500 million of the Australian dollar against the US dollar was traded in New Zealand each day."

The New Zealand survey is part of a three-yearly study looking at 48 countries and used data from the five major banks participating in the local wholesale financial markets.

The survey also covers interest rate derivative products such as forward rate agreements (FRAs) and interest rate swaps.

The Reserve Bank says average daily New Zealand turnover in these products was around NZ$1 billion - up 22% since 1998.

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