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The amount of money coursing through the foreign exchanges each day now surpasses the combined annual economic output of Britain and France. But the euro's share of this $5.3-trillion (U.S.) market has shrunk to its lowest since the currency came into existence in 1999, according to the Bank for International Settlements (BIS). It's a puzzle.

While its turnover grew in absolute terms, the euro's share of all spot and derivatives currency fell to 33 per cent, down a seventh from 2010 and reversing all the ground made in the past decade. Since two currencies are involved in each trade, the sum of the market shares is 200 per cent.

The euro's loss was the yen's and dollar's gain. Yen trading leapt as markets anticipated the sea-change in Japanese monetary policy in April, the month the data was collected. That helped lift the yen's market share by a fifth to 23 per cent. In contrast, traders had a less clear-cut story to trade in the euro.

The dollar's share held up, rising a couple of percentage points to 87 per cent. It may have something to do with the fact that so many institutional investors, hedge funds and proprietary trading firms are based in the United States and tend to trade currencies against the dollar rather than the euro. Turnover fell or stagnated in most euro zone countries but grew in the United States.

The rise of the Chinese renminbi and Mexican peso, which entered the list of the 10 most traded currencies, also favours the dollar, against which they are most widely traded.

Policy may have played a part. Switzerland's cap on the franc's exchange rate against the euro depressed its trading. And anyone funding carry trades was unlikely to use the euro since U.S., Japanese and British interest rates were lower than the euro zone's in April.

It's unclear whether these factors fully explain the drop in the euro's market share. And trends can't be extrapolated from a snapshot survey. But these trading shifts matter to those who hire and fire traders and decide which FX businesses to grow.

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