The FX market sustained its growth
momentum into 2003. Average daily trading volume picked up significantly
in the first half of 2003 before moderating. Daily trading volume
averaged US$119.4 billion in 2003, peaking at US$136.5 billion
in the second quarter, the highest level since 1998 (See Chart
10). The surge in trading volume reflected heightened exchange
rate volatility in major currency pairs such as Euro/US Dollar
(USD) and USD/Japanese Yen (JPY), and coincided with a synchronised
sell off in the USD amid concerns of slowing US growth, the
sustainability of high US current account and budget deficits
given the low interest rate environment, and the possibility
of a protracted war in Iraq.
Major currencies like the USD, Euro and JPY maintained their
dominance in the FX market. Trading in USD/SGD contributed almost
10% of total turnover in 2003.
Enhancing Risk-focused Supervisory Approach
Box 1 – Fostering a Sound and Progressive
Financial Services Sector
