Online Trading Shows Popularity Of FX As Asset Class

Stephen Harris

27 January 2009

Deutsche Bank’s online retail foreign exchange trading platform, dbFX.com, saw customer numbers increase by over 250 per cent in 2008 as foreign exchange grew as an asset class of choice for investors amid the financial crisis.

The bank says that the increase has occurred as investors are looking to FX as an alternative, and uncorrelated, asset class to equities and bonds. Volumes also notably increased from 2007, as investors took advantage of significant volatility in the market, it said.

EUR/USD was the most popular currency pair on the platform accounting for 41 per cent of all trades, compared to 20 per cent of volume the previous year.

The group of currencies representing carry trades were only 24 per cent of volume in 2008 versus 36 per cent in 2007, as the carry trade - the dominant trading strategy in 2007 - lost popularity with investors who moved out of leveraged currencies as global interest rates fell last year.

“Ultimately, FX is proven to be uncorrelated to bond and equity markets so it’s no surprise that retail investors are looking to FX, which is a proven asset class with institutional investors as a means of generating returns,” said Betsy Waters, global director of dbFX.com.

Launched in 2006, dbFX.com has 34 currency pairs and is accessible in more than 70 countries around the world.