Enjoy complimentary customisation on priority with our Enterprise License!
The foreign exchange market size is estimated to grow at a CAGR of 10.31% between 2023 and 2028. The market size is forecast to increase by USD 516.48 billion. The market is categorized based on Type, Trade, and Geography. Within the type segment, reporting dealers category represented the largest value, amounting to USD 262.98 billion in 2018. The reporting dealers in the foreign exchange market provide inter-day liquidity and use this fund to buy and sell foreign exchange at their posted bids, in addition to offering quotes throughout the trading day. These factors are driving the market growth.
For More Highlights About this Report, Download Free Sample in a Minute
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Increasing market liquidity is notably driving the market growth. The global foreign exchange market is the most easily liquidated financial market, as it involves the trading of numerous currencies all around the world. Traders in this market have complete freedom to buy or sell currencies anytime, as per their own choice. Liquidity refers to the ability of the currency pair to be purchased and sold without producing a major change in its exchange rate in the global foreign exchange market.
Furthermore, the rapid availability of news and pricing provides foreign exchange traders with the most up-to-date information for trading. Such factors will fuel market expansion during the forecast period.
Market transparency in trading is an emerging trend shaping market growth. Market transparency is the ability to have knowledge of what is being traded, at what price, by whom, and where. Hence, there is a lot of clarity in the global foreign exchange market. The traders in the global foreign exchange market have full access to all market data and information, which aids in the monitoring of currency price movements in many nations via the real-time portfolio. The global foreign exchange market is huge in size and spans multiple time zones. Hence, information on the global market is freely accessible.
Furthermore, no government or central bank has the power to corner the market or fix prices for an extended period of time on its own. Because of the temporary time lag in transferring information, some entities may get short-term benefits. This advantage, however, cannot be maintained over time. The foreign exchange market size also contributes to its fairness and efficiency. Therefore, such factors will lead to market expansion during the forecast period.
Counterparty risks with respect to foreign exchange are a significant challenge hindering market growth. Counterparty risk is the risk associated with the other party to a financial contract not fulfilling its obligations. The foreign exchange market is an international market. As a result, foreign exchange regulation is a difficult issue because it involves the sovereignty of the currencies of many countries. This creates a scenario wherein the global foreign exchange market becomes mainly unregulated. Therefore, there are no transactions that assure risk-free trade execution.
As a result, when investors or traders enter deals, they must be aware of the risk of defaults, wherein the counterparty will not have the intention or ability to respect the contracts. Forex trading necessitates a thorough assessment of counterparty risks as well as the development of strategies to manage them. Thus, such counterparty risks may hinder market growth during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Foreign Exchange Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Bank of America Corp. - The company offers foreign exchange services such as outbound domestic wire transfer and outbound international wire transfer services.
The research report also includes detailed analyses of the competitive landscape of the market and information about 19 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The reporting dealers segment is estimated to witness significant growth during the forecast period. The market participants that operate in the foreign exchange market hold risky inventory positions during the maturity period. In the case of liquidity, the suppliers that absorb an imbalance in the market are compensated through high returns. These returns reflect the risk premium that is associated with non-diversifiable risks.
Get a glance at the market contribution of various segments Download the PDF Sample
Financial institutions that actively participate in local and global foreign exchange and derivatives markets are known as reporting dealers. Reporting dealers also include US subsidiaries and branches of foreign institutions with trading or sales desks in the US. If the inventory management practices of individual traders are analyzed, one can find that the reporting dealers do not hold any open positions for a significant amount of time. However, the burden of providing the inter-day liquidity provision rests on non-financial participants. Ideally, it is the market consisting of dealer-financial institutions that provide liquidity overnight and should continue to provide liquidity during the forecast period.
For more insights on the market share of various regions Download PDF Sample now!
Europe is estimated to contribute 43% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. Foreign exchange trading activity rose by 3.6% between October 2020 and October 2021 in North America. This rise is attributed to continuous trade monitoring and surveillance in the foreign exchange market in the region. The tightening of regulatory scrutiny of top vendors was needed in the wake of recent collusive activities and benchmark manipulations in currency markets. Therefore, more trading firms will reveal the real-time record of the trading activity. Sell-side dealers may play a significant role during the forecast period, and this should increase the auditable standards in trading activities and may enable easy communication between traders. Low volatility often results in stable earnings in safe-haven currencies and heavy gains in their speculative counterparts.
For instance, the US currency is vulnerable to low volatility, and therefore, it heralds short-term interest rate changes. This may allow a few speculators in the market to hold US dollars in their portfolios and may help them to seek higher and riskier returns in other currencies, such as the Australian dollar and the Euro. Such factors are expected to drive the regional market growth during the forecast period.
The spread of the pandemic in the region led to a temporary shutdown of many industrial facilities, which impacted foreign exchange activities in 2020. However, with the start of COVID-19 vaccination campaigns in 2021, the North American foreign currency market demonstrated more stability and optimism. The USD, for example, recovered against the backdrop of economic recovery. Furthermore, the North American foreign exchange market is expected to maintain its resilience during the forecast period. Factors such as strong economic growth and supporting monetary policies are expected to contribute to this trend, creating a favourable trade environment for investors and enterprises and hence driving the growth of the market during the forecast period.
The foreign exchange market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
|
Foreign Exchange Market Scope |
|
|
Report Coverage |
Details |
|
Page number |
178 |
|
Base year |
2023 |
|
Historic period |
2018 - 2022 |
|
Forecast period |
2024-2028 |
|
Growth momentum & CAGR |
Accelerate at a CAGR of 10.31% |
|
Market growth 2024-2028 |
USD 516.48 billion |
|
Market structure |
Fragmented |
|
YoY growth 2023-2024(%) |
8.82 |
|
Regional analysis |
North America, Europe, APAC, South America, and Middle East and Africa |
|
Performing market contribution |
Europe at 43% |
|
Key countries |
US, China, Japan, UK, and Switzerland |
|
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
|
Key companies profiled |
Bank of America Corp., Barclays PLC, BNP Paribas SA, Citigroup Inc., Commonwealth Bank of Australia, DBS Bank Ltd., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase and Co., London Stock Exchange Group plc, NatWest Group plc, Societe Generale SA, Standard Chartered PLC, State Street Corp., The Bank of Nova Scotia, The Goldman Sachs Group Inc., UBS Group AG, Westpac Banking Corp., and XTX Markets Ltd. |
|
Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period. |
|
Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by Trade Finance Instruments
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
Certified ISO 9001 : 2015
We are ISO 9001:2015 recognized that ensures quality services and product delivery to our clients.
We are GDPR and CCPA compliant! Your transaction & personal information is protected from unauthorized use.
Get lifetime access to our
Technavio Insights
Get the report (PDF) sent to your email within minutes.
