Tuesday, 26 July 2011

Currency trading gets tougher for banks

Banks second quarter figures have shown an interesting trend, that it is becoming harder to make money by trading in currencies. Banking giant Goldman Sachs Inc. have reported a 53% revenue plunge in its foreign exchange division. Banking rival Citigroup reported an 18% fall in fixed-income revenues which is largely driven by currencies.

Jeff Feig, global head of foreign exchange at Citigroup has said "It's harder to make money, and thus we are seeing less of the frantic hiring, and some layoffs are occurring."

This performance is in stark contrast to 2008 and 2009 where trading volumes were far larger and margins between buy and sell rates were much larger.

The industry has also seen emerging traders who have focused on this area, particularly BNP Paribas who have focused on low quantity higher volume trading.

Sadly, I'm not sure that this is going to make holiday money go a little further just yet.

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