FX market plays a central role in international monetary system says IMF

International Monetary Fund or IMF has stated in a latest update that foreign exchange is the largest and most liquid financial market, with nearly $10 trillion changing hands daily. Its the underpinning for global trade and financeand its structure is changing as nonbank financial institutions, or NBFIs, assume a larger role in transactions used to manage currency risk and access to foreign funding. The markets central role in the international monetary and financial system makes it highly sensitive to macroeconomic developments and policy shiftsparticularly those that heighten uncertainty. IMF noted that global financial or economic uncertainty typically increases investor risk aversion and boosts demand for safe-haven assets, leading to volatility and liquidity strains in foreign exchange markets.

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