TOKYO -- Daily trading in Tokyo's foreign exchange market averaged a record $407.1 billion in April, data released Monday shows, as negative interest rates drove institutional investors to higher-yielding foreign securities.
The figure, a 5.1% increase from October, was the highest recorded by the Tokyo Foreign Exchange Market Committee since it began conducting the survey in 2006. The overall growth was driven by foreign exchange swaps, which rose 2.2% to $209.3 billion, and forward contracts, which jumped 27.6% to $61.8 billion.
Swaps and forward contracts often are used to access foreign currency or to avoid currency risk when investing in overseas assets. With the Bank of Japan's negative-rate policy driving down domestic interest rates, institutions seeking higher yields than Japanese government bonds can offer are investing more in foreign debt.
Spot market turnover edged up just 0.4% to $121.7 billion amid aversion to currency risk. Investment in foreign bonds by trading currencies on the spot market could grow in the future, said Akira Hoshino, who chairs the committee.
The semiannual survey covers 30 domestic and foreign banks with bases in Japan.