The markets that have a smaller amount of foreign exchange trading for speculatory purposes than for trade purposes will likely experience more volatility than those where trade flows play a larger role.

Question

Quizplus · Accepted Answer

If a market has a smaller amount of foreign exchange trading for speculatory purposes, it means that the majority of the trades are driven by trade flows. This leads to a more stable and predictable market. However, if a market has a larger amount of speculative trading, it can lead to volatility and unpredictable movements in the currency exchange rates.

The Markets That Have a Smaller Amount of Foreign Exchange