Deutsche Bank said its online retail foreign exchange (FX) trading platform, dbFX.com, has reported a 501 per cent increase in volumes across the Middle East for the first quarter of 2009 when compared to the first quarter of 2008.

In comparison, dbFX.com saw a 37 per cent increase in trading volumes globally in the first quarter of 2009 over the same period last year, as retail traders continued to favour FX over equities and bonds.

The latest figures further underline the Middle East as one of the world’s fastest growing FX trading regions, said a top executive.

The Middle East was once again one of dbFX’s best performing regions, where Euro/US Dollar, Pound/US Dollar and US Dollar/Japanese Yen were the most popular currency pairs, generating significant trading volumes in the first quarter of 2009.

Middle Eastern trading volumes for the Euro/US Dollar, Pound/US Dollar and US Dollar/Japanese Yen currency pairs represented 85 per cent, 10 per cent and one per cent respectively of all Middle Eastern dbFX trading during the quarter.

The first quarter of 2009 continued to witness the dominance of the Euro/US Dollar trading pair which has seen its share of trading volumes increase from 37 per cent of all Middle Eastern trades in the first quarter 2008 to 85 per cent.

Volumes of this currency pair for the Middle East have increased by more than 1280 per cent during the year.

Betsy Waters, Global director of dbFX.com, said, 'From a trading perspective, the carry trade has been a staple of FX traders’ portfolios for some time and has brought many new entrants to the market.'

'However, traders have begun moving to alternative strategies such as valuation trades - where investors seek out seemingly undervalued currencies - and such behaviour reflects a growing understanding and knowledge of the FX space, and the strategies that dominate it, by traders.'

The latest figures illustrate a continued move away from trading the carry trade in first quarter of 2009 over fourth qaurter of  2008, once one of the most favoured strategies employed by traders, with trading on the Pound/Australian Dollar, New Zealand Dollar/US Dollar and US Dollar/Japanese Yen down 81 per cent, 74 per cent and 28 per cent respectively globally.

In the Middle East, this pattern was also seen with the US Dollar/Japanese Yen volume dropping by 65 per cent quarter on quarter.

Instead, investors have looked to the mainstream ‘big three’ currency pairs as a means of generating returns, with the Euro/US Dollar, Pound/US Dollar and US Dollar/Japanese Yen the most traded pairs on the platform and making up over 75 per cent of total global trades.

In the Middle East, these three currency pairs accounted for 96 per cent of all trades in the first quarter of 2009, Waters said.

“There’s no doubting the growth of retail FX as an asset class over the past 12 months or so, and it’s encouraging to see this growth and development continue unabated,' she pointed out.

'The Middle East continues to emerge as one of the fastest growing FX markets where investors are increasingly looking at FX as an attractive and alternative asset class,' she added.-TradeArabia News Service