(28 August 2025 – Singapore) The Global Foreign Exchange Committee (GFXC) convened in Singapore to exchange views on FX settlement risk and FX derivatives benchmarks, pre-hedging, forward-looking conversations on the role of stablecoins in FX markets, adherence to the FX Global Code, liquidity, market resiliency and USD dynamics.
Despite perceptions that the FX market has a fragmented market structure, which makes the assessment of available liquidity sometimes difficult, there was a positive overview on how FX markets are evolving.
Despite greater uncertainty, FX markets have proven resilient, with orderly trading conditions. The magnitude of the US dollar depreciation trend has been exacerbated by increased hedging of underlying USD asset exposure. Traditional correlations between interest rate differentials, risky assets, and currency movements have broken down.
During periods of market stress, liquidity tends to decrease more rapidly in FX forwards relative to the spot market, making references rates on FX forwards less reliable. It was explained that some platforms had started introducing a confidence level index associated with each quoted benchmark datum.
“We highlight the importance of the GFXC continuing outreach activities particularly among buy-side market participants to improve education and awareness. The number of institutions adhering to the Code continues to rise although at a slower pace” commented GXFC Chair, Bank of Mexico’s Gerardo García López.