Managing currency exchange risk has been facilitated by a well-functioning forward market.
There exists a two-way market, with pension funds and exporters taking foreign-currency
paying positions and domestic corporate end-users taking foreign-currency buying positions.
Currently, the foreign exchange hedging needs of domestic users are met fully by pension
funds and exporters. This situation is likely to continue as the pension fund industry
continues to grow. Liquidity in the forward market, as measured by bid-ask spreads, is