How Do Speculators and Arbitragers Affect the Foreign Exchange Market

question 17

Essay

How do speculators and arbitragers affect the foreign exchange market? Briefly describe the different ways that arbitragers can "cover" themselves in the foreign exchange market. Finally, will speculation in foreign exchange always have a stabilizing effect on the foreign exchange market? Why or why not?

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Definitions:

Conspiracy

Conspiracy refers to an agreement between two or more persons to commit an unlawful act, or a lawful act by unlawful means, often done in secret.

Auditory Hallucinations

The experience of hearing sounds or voices that are not present in the external environment, often associated with psychiatric conditions.

Darting Eyes

Rapid eye movements from one focus point to another, often indicative of nervousness, anxiety, or distraction.