Forwards spreads fall but won’t hit January levels, say traders

federal-reserve-bank-new-york — The New York Fed rolled out dollar swap lines to a clutch of central banks in March

Natasha Rega-Jones
06 May 2020

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The Federal Reserve’s US dollar swap lines have helped reduce bid/offer spreads in the foreign exchange forwards market that had soared during the volatility in March, but traders believe they will remain elevated above January levels for some time.

When market conditions started to deteriorate at the beginning of March, the head of FX forwards at one US dealer says that spreads “massively increased” – in particular, dollar/yen forwards spreads were said to be almost 20 times wider than usual

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