Spot FX liquidity remains low
LONDON - Liquidity in spot foreign exchange remains lacklustre for banks, despite a slight return in risk appetite at the beginning of the year.
"Risk appetite might have improved from last year's lows but liquidity has not," said Caio Natividade, derivatives strategist at Deutsche Bank in London, in a report dated February 19. "Average transaction costs in G-10 FX spot, our measure for liquidity, are still greater than during the pre-Lehman period."
According to the strategist, transaction
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