A survey of market practitioners' views on exchange rate dynamics

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalNot applicablepeer-review

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Detail(s)

Original languageEnglish
Pages (from-to)401-419
Journal / PublicationJournal of International Economics
Volume51
Issue number2
Publication statusPublished - Aug 2000

Abstract

We report some findings from a survey of practitioners in the interbank foreign exchange markets in Hong Kong, Tokyo, and Singapore. The respondents contend that liquidity and market uncertainty are two important reasons for deviating from the conventional interbank bid-ask spread. A strong customer base is perceived as a source of competitive advantage for large participants. Most respondents agree that non-fundamental factors have pervasive impacts on short-run exchange rates. Speculation is believed to increase volatility but also improve market liquidity and efficiency. Despite their claim that intervention exacerbates volatility, more than one-half of the respondents suggest official intervention helps restore equilibrium. (C) 2000 Elsevier Science B.V. All rights reserved.

Research Area(s)

  • Exchange rate dynamics, Foreign exchange traders, Microstructure, Survey study