Turkish Lira Drives Explosive Growth on Tokyo Financial Exchange in May

The Japanese exchange reported significant increases on last month's trading volumes, despite a decline in interest rate trades

The Tokyo Financial Exchange (TFX) released its trading volume report for May this Friday. The Japanese financial exchange saw a drastic month-on-month increase in overall trading volumes despite a substantial decrease in interest rate futures trading.

At the end of April, the TFX saw a total of 127,048 futures contracts being traded on its exchange. This figure decreased to 89,333 in May – a 29.7 percent difference. This downturn may in part be explained by a general decrease in investor enthusiasm in the Japanese market after a strong uptick in trading over the course of the first quarter of 2018.

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The downturn in interest rate futures was countered by strong growth in the FX daily futures contracts market. At the end of April, 2,143,488 futures contracts had been traded in the FX market on the TFX. This number increased by 42.5 percent, to 3,053,541, in May.

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Shorting the Turks

This increase was in large part explained by a more than doubling of Yen-Turkish Lira trading volumes. In May, investors traded 722,537 futures contracts, an 150 percent increase on April, in yen-lira trading.

This was likely due to Turkey’s great leader, Recep Tayyip Erdogan, making a variety of disturbing comments regarding central bank policy that drove investors to short sell Turkish Lira.

Equity index futures also increased substantially in May when compared to April. TFX reported that a total of 343,202 equity index futures contracts were traded on its exchange last month.

This was a 10.5 percent increase on April. Growth was spread evenly across markets, with the largest increase taking place in the trading volume of FTSE 100 daily futures contracts which increased by 94 percent.

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