Dealers work under a monitor displaying the closing figure of the Nikkei 225 Stock Average, top, and the exchange rate of the yen against the U.S. dollar at a foreign exchange brokerage in Tokyo, Japan, on Friday, Jan. 25, 2012. The yen fell, set for the longest weekly losing streak in more than four decades, after consumer prices declined, supporting policy makers devaluing the currency. Photographer: Tomohiro Ohsumi/Bloomberg

Neal Armstrong and David Goodman London

The biggest currency traders are reporting a jump in volumes this year as a slide in the yen, pound and Swiss franc increase anticipation of future price swings to a five-month high.

Barclays, the third-largest dealer based on Euromoney Institutional Investor data, said earlier this month that volumes for the yen versus the euro climbed to a daily record and trading across all currencies had risen to the most in a year.

Citigroup said turnover in the yen was “very high”, while Deutsche Bank, the largest currency dealer, said a calming of euro zone tensions was spurring demand for higher-yielding assets.

The yen is the worst performer this year of 10 developed nation currencies tracked by Bloomberg correlation-weighted indices, sliding 5.6 percent, as new Prime Minister Shinzo Abe presses the central bank to boost stimulus to spur growth. The pound has declined 3.3 percent.

The Swiss currency slid to its weakest level since May 2011 versus the euro on January 18, while sterling depreciated to a 13-month low against the common currency yesterday as demand for safer assets waned.

A gauge of implied volatility for Group of Seven currencies compiled by JPMorgan Chase rose to 8.7 percent yesterday after rising to 9.19 percent on January 18. The index has climbed from last year’s low of 7.09 percent on December 17.

“It’s been a very encouraging start to the year in terms of volumes and performance,” Kevin Rodgers, the global head of foreign exchange at Deutsche Bank, said last week.

“It feels like the market is getting back to a normal level of activity and behaviour that you would have seen pre-crisis.”

Volumes for the yen versus the euro rose to a daily record on January 16, Barclays said.

Overall currency volumes reached the highest daily level in a year on January 15, the company said. Citigroup said daily yen volumes were 110 percent of average on January 16, in its CitiFX Wire report to clients that day.

Foreign exchange trading volumes slumped last year as central bank efforts to cap borrowing costs through bond purchases, and in some cases to limit gains in the currencies, stifled price swings.

Deutsche Bank, which is due to report earnings today, said in October last year that compressed margins cut foreign exchange revenue “significantly” in the third quarter.

UK currency trading volumes fell to an average $1.92 trillion (R17.4 trillion) a day in October, 5 percent lower than its previous survey in April, the Bank of England said on Tuesday, citing a twice-a-year survey.

Average trading volumes in the US and Canada also declined in October from six months earlier, while those in Japan increased, separate surveys from foreign exchange committees showed. – Bloomberg