War Effects Surface, Price Volatility Rises Credit Concerns Intensify, Liquidity Fades
BANKS
Although the foreign exchange market has never been through a war, analysts and bank officials surveyed earlier this week say that some of the likely effects of a serious military conflict on the industry have already become evident, including a dramatic increase in price volatility, a sharp drop in liquidity which has forced spreads to widen, more intense credit concerns as risks rise and an increase in cross rate and options trading.
If a war breaks out in the Persian Gulf, "price volatility
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