Liquidity of a currency can affect the extent to which speculation can impact the currency's value.

Question

Quizplus · Accepted Answer

If a currency is highly liquid, it means that there are many buyers and sellers in the market, making it more difficult for individual speculators to significantly impact the currency's value. Conversely, if a currency is illiquid, a small group of speculators could potentially cause significant fluctuations in its value.

Liquidity of a Currency Can Affect the Extent to Which