Prepare to be Shocked - How Much is the Forex Market Worth?
29 Mar 2021
The global financial markets are packed full of asset classes and instruments, with the range of options for investors continuing to grow every single year.
However, it’s the forex market that remains the single most popular and widely traded in the world, with this entity renowned for its liquidity, inflated leverage and innate volatility.
In this post, we’ll ask just how much this marketplace is worth, while considering the potential for further growth in the future.
How Much is the Forex Market Worth and How has it Grown?
There’s no doubt that the global forex market has grown incrementally over the course of the last five years, with its value peaking at $6.6 trillion as recently as 2019.
At the same time, the cumulative value of the market broke through the $2 quadrillion mark for the first ever ti
me,
reaching a staggering $2.409 quadrillion
by the end of the year and just prior to the coronavirus pandemic of 2020. These numbers are certainly higher than 2013, when the average daily trading volume was estimated at just $5.4 trillion. Interestingly, however, these volumes and the cumulative forex market value actually dipped in the three years from 2016 to 2019, with the former falling slightly to $5.2 trillion during the 12 months prior to January 2017. At the end of 2016, the global forex market was also worth just $1.934 quadrillion, with this highlighting the steady growth that has ensued in the subsequent five years.
What Does the Future Hold in Store for the Forex Market?
Clearly,
forex trading has become increasingly accessible
and popular during this time, particularly as sustained technological advancement and the capacity of online brokerage sites have evolved to empower part-time investors across the globe. A similar trend is forecast to continue between now and 2025, during which time the global forex market is expected to
achieve a compound annual growth rate (CAGR) of 6%
. This will lead to sustained and exponential growth in the market’s medium-term value, while sending daily trading volumes soaring well beyond the $7 trillion mark. Interestingly, it’s the continued urbanisation and digitalisation of both emerging and developing economies that will drive future growth in this space, with the currencies of nations such as Russia, India, Brazil and China expected to see increased demand in the next five years. This will also be influenced by the temporary rise of currencies against the deflating US dollar, with the South African rand (ZAR) offering a relevant case in point. In fact, the ZAR recently
soared to 16-month highs against the greenback
, with this move also influenced by the growing strength and diversity of the South African economy as a whole.
