(Xinhua)
Updated: 2007-09-27 09:53

HONG KONG - Hong Kong ranks the sixth in the global foreign exchange market, and the seventh when the over- the-counter derivatives market is included, according to a latest survey by the Bank for International Settlements.

The results of the triennial survey confirmed that Hong Kong continues to build on its position as one of the world's major centers for foreign exchange and derivatives activities, the city's Monetary Authority Deputy Chief Executive YK Choi was quoted as saying in a government statement released late Tuesday.

"Particularly notable from the survey is the significant increase in the trading volume of the Hong Kong dollar, due to the continuing sizable inflow of capital to the Chinese mainland through the Hong Kong foreign-exchange market," Choi said.

Net daily turnover of foreign-exchange transactions rose to US$174. 6 billion in April, 70.9 percent higher than three years earlier, according to the survey results released Tuesday by the Bank for International Settlements.

Daily spot transactions grew 6.4 percent to US$37.9 billion while net turnover of forward transactions more than doubled to reach US$136.7 billion per day.

Forwards were mainly foreign exchange transactions and a large proportion was of short maturity of less than seven days. Hong Kong dollar against US dollar remained the most heavily traded currency pair in the local market.

The growth was attributed to greater asset-management and hedge-fund activities, a rise in bank treasury operations and active carry trade activities.

Average daily net turnover of over-the-counter derivatives rose 58.2 percent to US$23.6 billion, with strong growth seen in both foreign-exchange derivatives and interest-rate instruments, particularly interest-rate swaps.

In contrast to the 38.2 percent drop recorded in 2004, turnover in the Hong Kong dollar against the US dollar increased by more than 1.5 times this year. Its share to total net turnover rose from 7.2 percent in 2004 to 10.7 percent in 2007.

With regard to single-currency interest-rate derivatives, Hong Kong dollar-denominated contracts rose by 2.3 times to account for the largest share of the net turnover in 2007 while other major currencies registered declines.