FX Market Again..taken from the street

hmm... traffic jam.. have some thoughts to share...

Domestic forex market is currently shallow because of several reasons:
1. Demand for FX Transactions is thin. According to data, FX Transactions is dominated by banks who transact with other banks. Meanwhile, transactions done by domestic corporates and individuals is relatively small, although some corporates have transacted around $200 mio per day.
2. The FX transactions for hedging purpose are relatively small too, compare to spot market. What can be inferred from this? people are using natural hedge, or worse, people do not hedge. They use spot transactions to fulfill their currency needs, and open their position to market risk.

update again later