Forex is a market with extremely high volume, so it’s no surprise that the largest exchanges are located in regions where monetary trade is popular. These countries have large foreign currency reserves and carry out massive amounts of international trade on an everyday basis. Today we will aim to find the most popular jurisdictions for forex trading by looking at currency trading volume and GDP. We can use these two factors as a proxy for the amount of foreign currency flowing through the economy and hence how much of an appetite there is to trade those currencies on international markets. These countries are also where the best forex trading platforms across the world come from.
1) USA
When it comes to forex trading, the US doesn’t disappoint. It’s one of the world’s largest economies and its GDP (already massive) is growing at an impressive rate. According to The Money Project, the total current value of all USD denominated transactions in 2015 was $564 trillion – this figure is larger than the GDP of every other currency trading nation combined. Of course, this is not completely surprising given that it’s also the world’s reserve currency. However, even when you take into account that vast majority of international transactions are priced in USD, there is still an incredible volume of currency trading taking place on US exchanges – just under a quarter of the world’s forex transactions take place in USD.
2) United Kingdom
While UK’s growth has lagged behind many other economies since 2010, it did have two impressive growth periods between 1992 and 2008 – peaking at 18% in Q1 2008 [ Deloitte ]. In recent years, this success has been largely attributed to a large expansion of the financial sector [ The Guardian ]. This has led to a strong appetite for forex trading in the UK and an impressive turnover – 7% of the world’s currency trading takes place on British exchanges.
3) Japan
Japan is one of the world’s largest economies with an annual GDP (USD) of around USD 5 trillion. In Q2 2016, Japan’s economy grew at an annualized rate of 1%.
While most wouldn’t immediately associate the Japanese Yen with FX trading, it’s actually one of the world’s most traded currencies – ranking third after the US dollar and the Euro. According to a report by the Bank of International Settlement, Japanese banks accounts for a quarter of all forex transactions in the world. In fact, the Yen’s share has been rapidly growing over recent years from 13% back in 2006 to around 18% today.
4) Hong Kong
Hong Kong is another major financial center and since China opened up its markets following Deng Xiaoping’s reforms, this tiny city has been aggressively expanding its financial services. In 2015, Hong Kong overtook Singapore as the world’s second largest foreign exchange trading center measured by total transactions [ Financial Times ].
5) Germany
Germany is Europe’s most important economy and its GDP of $3 trillion would put it firmly inside the top ten largest economies in the world. Germany’s importance as a trading nation is underlined by its status as one of the few European countries to have a trade surplus.
