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Uh oh, it looks like activity in the forex industry slowed down recently.

Recall that I wrote about the decline in foreign exchange turnover a few weeks ago, citing the threat of central bank interventions as one of the reasons for the downturn.

This time around, data from two major interbank platforms, the Electronic Brokering Services (EBS) and the Reuters Dealing 3000-Spot Matching, showed that average daily spot trading volume dropped in March.

Bear in mind that the EBS and Reuters machine is much like a souped-up version of MT4 for major banks all over the globe. These were created by hotshot financial institutions in order to provide an efficient and liquid forex trading platform among banks.

Below are two charts showing the year-on-year difference for the two major platforms.

EBS Turnover Chart

EBS Turnover Chart

It’s pretty clear that there was a huge drop in the trading volume for both major interbank trading platforms.

In March 2012, for instance, the trading volume in the EBS was only $122.7 billion, a significant drop from the previous year’s $157.3 billion and February’s $126.7 billion. This was mirrored in the Reuters platform.

One reason explaining the decline in trading volumes is the uncertainty surrounding the eurozone debt crisis, which made banks and institutional traders hesitant to take any huge positions for their trades.

On top of that, the ever-present possibility of a currency intervention from the Bank of Japan (BOJ) or Swiss National Bank (SNB) also hurt trading volumes.

But, as I mentioned earlier, this data represents interbank transactions and not the entire forex market.

Still, these figures are significant because it’s through these interbank platforms that the big money flows are tracked. With that, we can use these figures to somehow gauge the ongoing behavior and future trends in the forex industry.

Don’t be alarmed though! A few months don’t necessarily make a trend. After all, these recent factors could be replaced by new ones later on, and we’ll just have to wait and see whether forex trading activity could pick up for the rest of the year.