More on Domestic FX Market

What is futures contract? Wikipedia said: "a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price". Well, for me its more of a speculative transactions. Info from BIS that only a small portion of futures contract are delivered (I forgot the exact number), even on FX. So, what can be concluded from that fact? It's speculation. People are buying and selling futures contract, and a few days later the reverse the contract, and settle the margin in domestic currency. Let say USD/IDR is transacted in BBJ or for the sake of argument, CME. What will happen to the spot market? What will happen to the volatility of USD/IDR? Christian Jochum and Laura Kodres' "Does the Introduction of Futures on Emerging Market Currencies Destabilize the Underlying Currencies" Feb 1998 mention that "to a large degree support hypothesis taht the behavior of the spot market is not destabilized by the futures market". Is it?Let's discuss this later. I have to go now...I'm back...In his research in Feb 1998, Mr. Jochum used Mexican Peso, Brazilian Real and Hungarian Forint, where these countries are having manage floating regime. Meanwhile Indonesian RUpiah is Freely floating. Managed FLoating currencies is totally different from free floating. In Managed floating regime, movement of a currency is heavily monitored, and therefore is heavily intervened. They have a cap and floor ban (i thing its around 5% up and below the level). While free floating is only slightly monitored, and is slightly intervened by the central bank. With managed floating, every movement is limited, and therefore there is no significant volatility, and therefore whatever the independent variable are, it will not significantly effect the movement of the managed floating currencies. I think that's what happen in the research. I've gone through the research at a glance, and I don't see any intervention counted in the research.Blog again later...