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Recent Characteristics of FX Markets in Asia-- A Comparison of Japan, Singapore, and Hong Kong SAR --

July 2, 2020
WASHIMI Kazuaki, KADOGAWA Yoichi
Financial Markets Department

In recent years, turnovers of Foreign Exchange (FX) trading in Singapore and Hong Kong SAR have outweighed those of Japan, and the gap between the two cities and Japan continues to stretch. The two cities consolidate trading of G10 currencies by institutional investors and others by advancing electronic trading. Additionally, a number of treasury departments of overseas financial/non-financial firms are attracted to the two cities, contributing to the increasing trading of Asian currencies in tandem with expanding goods and services trades between China and the ASEAN countries. At this juncture, FX trading related to capital account transactions is relatively small in Asia partly due to capital control measures. However, in the medium to long term, capital account transactions could increase, which would positively affect FX trading. Thinking ahead on post-COVID-19, receiving such capital flows would positively impact on revitalizing the Tokyo FX market, thereby developing Japan's overall financial markets including capital markets.

Notice

Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2020-E-3, is a translation of the original Japanese version, 2020-J-5, published in July 2020.

If you have comments or questions, please contact Financial Markets Department (E-mail : emu-.fmd51_post@boj.or.jp).