The Inventory Control Effect of the Foreign-Exchange Market Microstructure May

question 35

Essay

The inventory control effect of the foreign-exchange market microstructure may explain why traders may alter their quotes in absence of any news. Explain how this can happen.

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Definitions:

Continuous Flow

A production process where items move from one step to the next with minimal waiting, aiming to maximize efficiency and reduce waste.

Productivity Obstacle

Any factor that impedes the efficiency and effectiveness with which work can be performed and output can be generated.

Poor Communication

Inadequate exchange of information that leads to misunderstandings, errors, and inefficiencies in an organizational setting.

Clear Objectives

Well-defined aims or goals that are explicit and straightforward to understand and achieve.