BASEL, Switzerland (HedgeWorld.com)–The Bank for International Settlements issued its semi-annual report on over-the-counter derivatives, disclosing that the notional value of outstanding OTC contracts ended the first half of 2003 at US$169.7 trillion, up 20%, which is 7% more than its rate of increase in the preceding half-year period.
The Nov. 12 report made special mention of the “buoyant” OTC business in foreign exchange markets.
The forex segment “is an area that has not seen double-digit growth since the BIS began collecting these statistics. However, in the first half of 2003, outstanding contracts rose by 20% for this risk category.”
Breaking that category down by currency, the report observed that notional amounts of contracts involving the U.S. dollar expanded by 18%, contracts involving the euro by 27%, those involving the yen by a modest 2%.
There was growth across all but one risk category. The exception was gold, where producers engaged in extensive de-hedging due to the low interest rates. Notional amounts of such contracts fell by 4%, and their gross market value fell by 22%.