(Bloomberg) -- The foreign-exchange market proved its resilience to challenges ranging from tumbling profits to a rate-fixing scandal in figures published once every three years by the Bank for International Settlements.

Average daily trading dropped to $5.1 trillion in April, from a revised $5.4 trillion in the same month in 2013, the BIS said Thursday in its latest triennial survey of the currency market. If it hadn’t been for the dollar’s appreciation, that volume would actually have risen about 4 percent, according to the report. The use of swaps increased, widening its lead over spot trading, or dealing in the currencies themselves rather than derivatives.

The size of the drop in currency trading is potentially a surprise for an industry blighted by losses from the Swiss National Bank’s shock decision to scrap its exchange-rate cap last year, as well as accusations of price-rigging that have led to more than $10 billion in fines and penalties. While individual central banks recently reported a recovery in trading in the six months through April, that followed a steady drop-off in activity since 2014.

“One of the foreign-exchange market’s best qualities is its ability continuously to adapt and stay relevant in light of changing market and regulatory conditions,” Dan Marcus, London-based chief executive officer of Cie. Financiere Tradition SA’s ParFX platform, said before the BIS report was released.

Winning Yuan

The dollar increased its lead as the most-traded currency in the survey, and was on one side of 88 percent of deals, up a percentage point from three years earlier. The euro remained at No. 2, though its share fell to 31 percent.

The big winner was the yuan, which doubled its slice of the market to 4 percent. That made it the eighth most-traded currency worldwide and saw it overtake the Mexican peso to be first in emerging markets -- vindicating China’s efforts to liberalize its use.

Spot currency trading fell 19 percent to $1.7 trillion a day, its first decline since 2001. The use of swaps, which allow an investor to borrow one currency from a counterparty while simultaneously lending a second currency to another, climbed 6 percent to $2.4 trillion.

“Trading activity has changed unevenly across the main FX instrument categories,” the BIS said. “Volumes of spot trades and FX swaps, the two largest instrument categories, have evolved in opposite directions.”

The state of the currency market matters to everyone from central banks to companies right across the global economy. It’s the world’s largest financial market and is vital to the smooth running of all others. And it’s had a tumultuous time since the BIS’s 2013 survey, which showed a jump in daily trades from $4 trillion in 2010.

The manipulation scandal blew up shortly before the last report was published, and in July this year, HSBC Holdings Plc bankers became the first individuals charged by the U.S.

FX Concepts LLC, once the world’s biggest currency hedge fund, shuttered in October 2013, and the closures picked up again after losses on the Swiss franc in January 2015. The franc was another currency to lose market share in the latest figures, while the pound saw trading increase in April, two months before the Brexit vote.

Caught Unawares

Other unanticipated events, including the Bank of Japan adopting negative interest rates in January, and a slower pace of U.S. policy tightening than the Federal Reserve had predicted, are also hurting currency traders’ profits. Dealing is further hampered by a swath of regulations intended to prevent a repeat of the financial crisis. The Parker Global Index of top currency funds’ returns has fallen in two of the past three years and is headed for another decline in 2016.

Institutional investors such as insurance companies and pension funds further increased their activity in contrast to hedge funds and proprietary trading companies, with their greater market share spurred by their greater use of swaps, the Basel, Switzerland-based BIS said.

In terms of geography, the top trading centers extended their lead over smaller locations, with sales desks in the five biggest markets -- including the U.K., U.S. and Singapore -- capturing 77 percent of foreign-exchange deals.

The survey shows “a continuation of the trend toward greater concentration of FX trading in the largest financial centers,” the BIS said.

--With assistance from Anooja Debnath To contact the reporters on this story: Anchalee Worrachate in London at, Lananh Nguyen in New York at To contact the editors responsible for this story: David Goodman at, Boris Korby at, Paul Armstrong, Paul Cox

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