August 9, 2003	Saturday	Jumadi-us-Sani 10, 1424

LONDON, Aug 8: A clear trend of dollar weakness in the first half of 2003 has fuelled customer hedging demand, helping several major European banks post double-digit growth in foreign exchange dealing profits.

Strong gains on bonds in the run up to war in Iraq and recovery in equities in the second quarter also contributed to the rise in overall trading profits reported by European banks this month.

“In FX, the trade environment has been fairly benign. Where currencies were moving in a predictable way it’s not difficult to position yourself off the back of that,” said Nigel Harman, head of investment banking at KPMG.

“Banks are experiencing healthy and increasing FX revenue flows and FX is a component part of the overall customer service proposition they are looking to build.”

Volatility for major currencies increased marginally in the run up to the Iraq war, then jumped in late May after the euro sped to a record high on the dollar. The greenback depreciated as much as 10 per cent on a trade weighted basis in the first quarter.

HSBC, the world’s second biggest bank by market value, posted a 14 per cent rise in currency dealing profits in the first half of the year.—Reuters